Major European economies offered support on Friday for US President Barack Obama’s plan to limit banks’ size and trading activities but indicated they had no plans to follow suit.
Obama’s proposals could rewrite the world financial order but experts said they were light on detail and could cloud the global approach fostered by the G20 countries.
The EU will not imitate Obama’s plan, because it aims to reduce risk in the sector through other means, an EU source said on Friday.
“Look, we understand the US position and we understand his reasons. But I can’t see the EU going down this route,” said the source, who is close to EU financial policymaking.
“The US finds itself a little behind us on this. The Obama plan is not fit for the purpose in the EU,” she said.
Obama made his proposals on Thursday, saying he was ready to fight resistance from Wall Street banks he blamed for helping cause the global financial crisis.
The plan would prevent banks from investing in, owning or sponsoring a hedge fund or private equity fund.
It would set a new limit on banks’ size in relation to the overall financial sector and, perhaps most dramatically, could also bar institutions from proprietary trading operations, which are unrelated to serving customers, for their own profit.
French Economy Minister Christine Lagarde welcomed the proposal, saying it was a “very, very good step forward.”
UK Treasury Minister Paul Myners said Britain already had acted to address problems in its banking industry.
“He’s developing a solution to what he sees as the American issues, we’ve already taken the necessary action in the UK,” Myners said in an interview.
The German finance ministry stressed the need to move forward internationally and said Berlin would present its own proposals on improving banking regulation.
“We see the new proposals as a helpful suggestion for the continuing discussions on an international level. And we’re obviously aiming to find a solution to the problem of the ‘too big to fail’ issue,” ministry spokesman Michael Offer said.
Spanish Deputy Prime Minister Maria Teres Fernandez de la Vega said her country shared Obama’s views about the causes of the crisis but that each country should take its own measures.
The EU source, who declined to be named, said the bloc would focus on raising banks’ capital requirements and tightening financial regulation, pursuing initiatives under way in the European Parliament.
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