Financial Regulator Warns Against Relaxing Bank Capital Requirements
The head of Germany’s financial regulator, the BaFin, Mark Branson, has expressed his opposition to reducing capital requirements for banks. While acknowledging the need for banks to remain competitive, Branson emphasized the importance of maintaining the safety nets built by financial institutions to protect against potential crises.
In an interview with the Frankfurter Allgemeine Sonntagszeitung, Branson stressed that capital is crucial, alongside liquidity, as the latter can quickly evaporate in times of crisis. He noted that the European Union has made significant progress in strengthening its financial system since the financial crisis, describing this as a genuine strength that should not be compromised.
Branson also rejected the notion that US banks have looser capital requirements than their European counterparts, arguing that the US has a higher starting point and that no concessions should be made. However, he did express support for simplifying the regulatory framework, stating that some of the rulebooks in Europe are too thick and in need of clarification.