“Recent moves to delay and dilute vital regulatory protections reflect a worrying trend where ‘competitiveness’ is repeatedly used as a pretext to weaken essential safeguards against financial risks,” he said.
This applies especially to global banking rules known as the Basel 3 standards. While the EU, U.K. and other countries have enacted the global rules in national legislation, the U.S. has delayed doing so following massive lobbying from the banking industry.
Now, with Trump returning to the White House in a matter of weeks, the future of the rules looks uncertain — which creates a dilemma for the EU. Should the bloc push ahead with Basel 3 for the sake of banking stability and risk giving U.S. banks a competitive edge in the process? Or should it change direction and contribute to a broader weakening of standards?
In a sign that regulators may be looking to stay the course, the EU and U.K. have hinted at a coordinated response if the proposals are ripped apart in the U.S.
Villeroy de Galhau, speaking in Paris in November, called for a compromise that would simplify EU rules without necessarily upending global standards, explaining that “simplifying does not mean deregulating.”
The Commission’s job will be “to find the fine line between a race to the bottom and the objective to stay competitive,” said AXA’s de Courtois.
The industry, as a whole, is not opposed to such an outcome. No matter how onerous the EU’s suite of incoming rules may be — from the Basel package to clearing updates to cyber rules for finance — industry more often than not prefers certainty over uncertainty. In this case, compliance with well-forecast rules is preferable to the limbo of new rules being torn up and renegotiated.
One thing everyone can be sure of is that even if things end up getting substantially watered down, nobody will be keen to call the move deregulation.
