Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-09-26-Speech-1-094"
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"en.20050926.14.1-094"2
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".
Mr President, capital requirements are regarded as useful in preventing bank failure because they make shareholders bear more of the cost of failure. The international Basel II proposals, which this directive implements, are designed to achieve a better match between capital and risk than the simple 8% capital asset ratio of Basel I. However, no amount of bank capital, short of 100% of risk assets, can safeguard against failure. The minimum amounts of capital specified in any regulatory scheme are arbitrary.
As Mr Radwan stressed, other problems are the extent to which risk-spreading amongst individual banks of a banking group should imply a reduction in regulatory capital, and the difficulty of defining the division of responsibility across national supervisors. There are no objective answers to those vexed questions. For that reason I question the competence of this Parliament in this field. It is ridiculous that we should be involved in the minutiae of this directive given how complex and yet how important it is. But this is how Parliament works, with all of us Members, however experienced or inexperienced in the arcane arts of banking regulation, expected to make hundreds of reasoned judgments on questions, many of which cannot be answered in any objective way.
The rapporteur recommends that, owing to doubt, this directive should be reviewed in the future. The banking industry does not need that. Banks spend their time dealing with risk and uncertainty. Adding further uncertainty over future regulation will not help them to plan or look after our interests as customers and shareholders.
The bottom line is that there is no right amount of regulatory capital. If we kept that in mind when legislating, we would come up with rules that are a great deal simpler, and the Members of this Parliament would be spared from the farcical exercise of voting on hundreds of amendments."@en1
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