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Renegade EU's bank-capital pushback threatens to erode Basel 

October 11, 2016

Alexander Weber & Boris Groendahl, Bloomberg

The European Union has threatened to go rogue in talks on bank capital rules, and the bloc’s willingness to go its own way could undermine global standards intended to avert a new financial crisis.

Top EU policy makers have made clear that sweeping changes are needed before the EU will accept a capital-rule revamp under way at the Basel Committee on Banking Supervision. The EU has a track record of doing its own thing: in 2014, the Basel Committee rebuked the bloc for failing to properly implement existing standards.

William Coen, the Basel Committee’s secretary general, is sticking to his guns. In Washington on Oct. 7, he made clear that key elements of the revised standards criticized by Europe will be retained, while indicating possible areas for compromise. Coen brings that message to Brussels this week, when he appears before the European Parliament.

“Europe is the least compliant of all jurisdictions in implementing Basel III,” said Nicolas Veron, a senior fellow at the Bruegel think tank in Brussels. “It’s entirely realistic that they won’t faithfully transpose all new standards,” he said. “The question is: Is it in the EU’s best interest to undermine the Basel Committee as the global standard-setter? Because that’s effectively what the EU is doing now.” Read more

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