Paola Tama
speaker
26 appearances
1 recordings
1 series
first heard Jul 2026
last heard 15 Jul
Paola Tama’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 1 in all, peaking in Jul 2026 with 1.
Appearances
Opponents of these changes argue we should be really, really careful about undoing a framework which has helped us withstand shocks from the global financial crisis.
Hi, thanks for having me.
There's a number of proposals, but the most consequential one of them is to actually get rid of one of the discretionary layers of capital requirements that supervisors can impose on lenders if they believe that other safeguards do not sufficiently capture a bank's risks.
And capital requirements are the minimum amount of a bank's own money that it must hold to absorb losses and protect depositors.
And this specific capital requirement is pillar to leverage ratio.
Removing it would reduce the amount of capital that some banks have to hold, potentially freeing up billions for lending, but also reducing supervisors' tools for making banks more resilient.
One proposal is they're evaluating whether to reduce the number of banks that have to be fully Basel-compliant.
So these are international banking standards that were agreed following the global financial crisis.
And the EU has always been the outlier in that it applies Basel to all its lenders across the board, whereas the US and UK currently apply to a subset of those that are systemically important.
And so Brussels is going to review whether its approach is too cumbersome for small and uncomplex banks, and therefore it should kind of break out a number of banks that have to follow Basel's and others that may not have to follow it in full or would have a separate regime.
Well, this is the first big comprehensive review of EU banking regulations following the global financial crisis that goes into the direction of loosening them rather than tightening them.
And that's because there is a sense that EU lenders are incompatible enough compared to US or UK banks.
And industry argues that it's a question of risk aversion from the EU and that regulations are always applied to their furthest possible extreme.
And that's not the case in other jurisdictions, and therefore they lose out.
Yes, that's the main sense.
But opponents of these changes argue that it's a question of scale, that U-banks are not sufficiently big, that there's a lot of reluctance to mergers across borders or even within countries.
And that is the way to go for more banking competitiveness.
There's obviously going to be a huge debate, both within the Commission itself, ahead of presenting legal proposals next year on all of these changes, and then following that in the European Parliament and across EU member states, with some already saying, like Finland, that it's a bad idea, we should not be loosening the regulations that we put into place after the global financial crisis, because that's what makes our banks resilient and safe.
Yes, the European Commission has been saying that perhaps we have been way too risk avoidant and that there are benefits from introducing a level of controlled risk into the system.
And that means perhaps taking on more lending, enabling banks to do more lending.
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