As cited in Reuters, Hill said wherever applicable he would extend his predecessor’s policy of modifying global banking rules. In December, the EU departed from some elements of the Basel III capital rules, for which it was singled out by global banking regulators.
Designed to make the financial system safer, the internationally agreed rules are also aimed at facilitating comparison of banks from across the world.
In order to ensure that EU legislation is proportionate, Hill said he would "differentiate" from other Basel rules too.
At a financial conference in Brussels, he said the idea is not to overburden smaller, lower risk institutions with the same requirements that are needed for bigger, riskier ones.
Basel norms calls for a binding ratio, whose level is still under deliberation. It aims to set a net stable funding ratio, which mandates banks to hold additional long-dated bonds so as to cover potential liquidity crunches.
According to Hill, differentiation in both of these areas would be crucial.
Global regulators including Deutsche Bank, Societe Generale and HSBC are in the process of concluding a separate rule to compel the top 30 banks globally in order to issue bonds that can be written down if the lender lands into trouble.
In Europe, Basel rules are being applied to several thousand lenders, while they are restricted for other parts of the world, such as the US, the news agency said.
Image: Basel rues are designed to make the financial system safer. Photo: courtesy of Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net
