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.
RECOGNITION: Former Fijian prime minister Mahendra Chaudhry said that Taiwan’s New Southbound Policy serves as a stabilizing force in the Indo-Pacific region Taiwan can lead the unification of the Chinese people, Nobel Peace Prize laureate and former Polish president Lech Walesa said in Taipei yesterday, adding that as the world order is changing, peaceful discussion would find good solutions, and that the use of force and coercion would always fail. Walesa made the remarks during his keynote address at a luncheon of the Yushan Forum in Taipei, titled “Indo-Pacific Partnership Prospects: Taiwan’s Values, Technology and Resilience,” organized by the Taiwan-Asia Exchange Foundation with the Ministry of Foreign Affairs. Walesa said that he had been at the forefront of a big peaceful revolution and “if
North Korea tested nuclear-capable rocket launchers, state media reported yesterday, a day after Seoul detected the launch of about 10 ballistic missiles. The test comes after South Korean and US forces launched their springtime military drills, due to run until Thursday. North Korean leader Kim Jong-un on Saturday oversaw the testing of the multiple rocket launcher system (MRLS), the Korean Central News Agency (KCNA) said. The test involved 12 600mm-caliber ultra-precision multiple rocket launchers and two artillery companies, it said. Kim said the drill gave Pyongyang’s enemies, within the 420km striking range, a sense of “uneasiness” and “a deep understanding
North Korea yesterday fired about 10 ballistic missiles to the sea toward Japan, the South Korean Joint Chiefs of Staff (JCS) said, days after Pyongyang warned of “terrible consequences” over ongoing South Korea-US military drills. Pyongyang recently dashed hopes of a diplomatic thaw with Seoul, Washington’s security ally, describing its latest peace efforts as a “clumsy, deceptive farce.” Seoul’s military detected “around 10 ballistic missiles launched from the Sunan area in North Korea toward the East Sea [Sea of Japan] at around 1:20pm,” JCS said in a statement, referring to South Korea’s name for the body of water. The missiles
‘UNWAVERING FRIENDSHIP’: A representative of a Japanese group that co-organized a memorial, said he hopes Japanese never forget Taiwan’s kindness President William Lai (賴清德) yesterday marked the 15th anniversary of the Tohoku earthquake and tsunami, urging continued cooperation between Taiwan and Japan on disaster prevention and humanitarian assistance. Lai wrote on social media that Taiwan and Japan have always helped each other in the aftermath of major disasters. The magnitude 9 earthquake struck northeastern Japan on March 11, 2011, triggering a massive tsunami that claimed more than 19,000 lives, according to data from Japanese authorities. Following the disaster, Taiwan donated more than US$240 million in aid, making it one of the largest contributors of financial assistance to Japan. In addition to cash donations and
RSS