The European Union plans to remove barriers for banks regarding cross-border capital flows. According to the Financial Times (FT), this follows from a European Commission (EC) document that it intends to present next month. The aim is for European banking houses to better compete in performance with their American rivals.
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EU plans relief for banks in battle with American competition, but no blanket cuts expected
Banks in the EU should, according to the plan, gain greater freedom in moving financial resources between EU countries. They could also receive relief when providing mortgages and loans to companies without ratings. The Union also plans to reform deposit insurance. It wants to review capital requirements for investment firms as well.
The plans are, according to the FT, designed to improve the sector’s current lag behind American competition. However, they do not reach the level of blanket reduction in capital requirements that the banking sector is striving for, the newspaper writes.
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Overlapping rules hamper lending, according to ECB national restrictions block hundreds of billions of euros
Representatives of European banks have long argued that their ability to provide loans is limited by overlapping requirements. These are imposed on them by supervisory authorities, crisis resolution authorities, and national regulatory bodies.
The changes have long been advocated by the European Central Bank (ECB). It estimates that as a result of national restrictions, capital in the amount of 225 billion euros (5.4 trillion CZK) and liquidity in the amount of 250 billion euros are blocked.
Source: ČTK
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