Key messages of the WFC response in brief:
● The separation of banking activities cannot efficiently cope with severe
problems like high leverage and excessive risk taking. It can only flank and
should not neglect effective measures such as debt brakes for the financial sector, a preventive testing of
financial innovations (finance TÜV)
and a scalable financial transaction
tax to slow down systemically risky volatility.
● There is neither evidence nor plausibility that the reduction of
intra-group subsidies through separating deposits from trading activities will
lead to shrinkage of the financial sector. Banks refinance themselves
primarily, if not solely, through lending activities within the financial
sector. Pro-cyclical and opaque credit intermediation chains and overly complex
financial innovations make appropriate risk premiums impossible.
● Possible shifts to non-bank finance must not serve as an excuse for
weak bank regulation but rather be integrated within an overall approach. This
is exactly the purpose of debt brakes for the financial sector, a finance TÜV
and a scalable financial transaction tax.
● In view of the limited impact of ring-fencing or separating banking
activities as such, full ownership separation such as in the Glass Steagall Act
of 1933 is the clearest approach.
Please find the complete response >>>here.
No comments:
Post a Comment