The European Central Bank (ECB) warned on Monday that increased financial regulation could lead to other kinds of risk-taking that officials will have to keep in their sights.
Responses by banks and other financial institutions to measures aimed at preventing future crises will have to be followed carefully, “and attention must be directed to detect new risks that may emerge from the reaction to the new regulations,” ECB Vice President Vitor Constancio told a conference in Frankfurt, Germany.
“For instance, the increase in the cost of capital may lead to strategies by financial institutions, to more risky activities and projects or to the creation of new types of non-regulated entities to conduct financial business,” he said.
“The perimeter of regulated institutions risks becoming a sort of moving target,” Constancio said.
Authorities worldwide have been pressed to tighten oversight of banks, insurers, hedge funds, brokers and private equity funds, among others, to ensure that taxpayers are not forced to back more massive bailouts like those seen since in 2007 and 2008.
Banks counter that increased regulations will force them to curb lending to the wider economy, a crucial element in ensuring an uncertain recovery does not falter.
Constancio reminded the academics and central bank officials gathered in Germany’s financial capital that some major changes lay ahead.
“The general overhaul of regulation that has been recently decided or is being prepared has far-reaching implications from the point of view of macro-prudential policy,” he said.
“The increase of capital and liquidity requirements, the limits to leverage, the new framework to deal with derivatives, the measures to address the problem of institutions ‘too big to fail’ either through higher loss absorption capacity or better resolution schemes — are all measures that contain important elements responding to macro-prudential concerns,” he said.
SOLIDARITY: A group of European lawmakers condemned China’s aggressive moves, while the foreign minister of Lithuania said Taiwan ‘cannot become a second Ukraine’ A German parliamentary delegation would visit Taiwan in the first week of October, German lawmaker Holger Becker on Monday told visiting Democratic Progressive Party legislators Fan Yun (范雲) and Lin I-chin (林宜瑾) at the Bundestag in Berlin. Asked by Fan whether he is worried about possible reprisals from Beijing, such as banning him and his family from entering China, Becker said he is more interested in visiting Taiwan, as “now is the time for democracies to stand together.” Fan and Lin also met with German officials to exchange views on digital education and governance. Investing in digital infrastructure and protecting equal rights to
As China waged extensive military exercises off Taiwan, a group of US defense experts in Washington was focused on their own simulation of an eventual — but for now entirely hypothetical — US-China war over the nation. The unofficial what-if game is being conducted on the fifth floor of an office building not far from the White House, and it posits a US military response to a Chinese invasion in 2026. Even though the participants bring a US perspective, they are finding that a US-Taiwan victory, if there is one, could come at a huge cost. “The results are showing that under
‘SIMULATED ATTACKS’: Ten warships each from China and Taiwan were maneuvering at close quarters in the Taiwan Strait, with some Chinese vessels crossing the median line Taiwan yesterday reiterated that it would not succumb to pressure from Beijing after China carried out its most provocative military drills in decades in retaliation for US House of Representatives Speaker Nancy Pelosi’s trip to Taiwan last week. “We will never bow to pressure. We uphold freedom and democracy, and believe Taiwanese disapprove [of] China’s bullying actions with force and saber rattling at our door,” Premier Su Tseng-chang (蘇貞昌) said yesterday. China had “arrogantly” disrupted regional peace and stability, he said, calling on Beijing to not flex its military muscles. President Tsai Ing-wen (蔡英文) has also called on the international community to “support
DRILLS CONTINUE: China’s creation of a restricted zone across the median line of the Taiwan Strait challenges a 70-year-old fact, a ministry of defense official said The nation’s military fully complies with international rules and guidelines when responding to Chinese military drills, the Ministry of National Defense said yesterday, vowing to continue defending Taiwan in accordance with international law. China on Thursday launched four days of military drills around Taiwan proper in response to US House of Representatives Speaker Nancy Pelosi’s visit to Taipei. The drills were expected to end on Sunday, but neither Beijing nor Taipei confirmed their conclusion, although the Ministry of Transportation and Communications said it had seen some evidence suggesting at least a partial drawdown. However, China yesterday said the drills would continue, saying “the
RSS