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A balance must be found to ensure a level playing field. In addition to disorienting investors, non-harmonized rules can create competitive disadvantages, so global harmonization is essential, not just for individual accounting areas. Harmonized rules are also essential for capital markets: they are increasingly being called upon to finance sustainable activities or the transition to more sustainable business models. It is therefore essential that standards exist that allow investors to assess, on an informed basis, the actual consistency of sustainability with their preferences. IFRS accounting standards have been adopted by 140 countries, and the verification of their implementation is the responsibility of international organizations such as Iosco and individual national authorities. I also remember that accounting standards are closely linked to the reporting of banks’ capital and stability requirements.
The EU is in a delicate stage of implementing the Basel 3+ rules that will come into effect in early 2025. What are the key points?
The EBA has been granted 140 authorizations to implement parts of these rules. The work plan for the Banking Authority is four years. The work has begun, but the journey is long. This means that the European regulatory framework will remain unstable until this process is completed. This in itself is a factor of competitive disadvantage for the European banking sector, considering that in the United States they are still in the discussion phase on how to implement the new Basel 3+ rules, so there is a gap that puts pressure on European banks. In addition, our European regulatory framework is extremely complex and fragmented. For the situation where we see today directives (directives have a national transposition phase) and regulations, it is necessary to carry out simplification work, and then there are technical implementation standards for the Eba, Esma, Eiopa authorities. Once again: guidelines, supervisory expectations, and then FAQs. This architecture brings the risk of inconsistency between the various levels and creates more areas of uncertainty. It is worth reviewing this complex and overly detailed framework that has been changing from 2008 to the present. We hope that this change will be over by 2025, but due to the delay of the EBA authorization, there will be at least another 2 to 3 years of uncertainty from 2025.
There are proposals to create a simplified common framework between EU countries to speed up cross-border bank mergers. What do you think?
Without a Capital Markets Union with banks at its core, the objectives of strategic autonomy, financing the digital transformation and pursuing the Green Deal will be difficult to achieve. Attention to these issues is essential. I also hope that we can also complete the Banking Union in a reasonable and pragmatic way, because it goes hand in hand with the Capital Markets Union. If the Capital Markets Union does not have large European banks that can compete with American and Asian giants, the EU will continue to rely on non-European entities and lose competitiveness. Therefore, it is necessary to establish a Banking Union to encourage the creation of universal banks that can compete with American giants. In the past, I have proposed the idea of relaunching a set of papers, as Lamfalussy and De La Rosière did, to verify whether there are differences between the current institutional structure, the rule framework and the mandate given to supervisory authorities, consistent with the changed world and the new Commission objectives. However, this is a long journey that needs to be addressed immediately: for example, the establishment of a twenty-eighth regime, based on voluntary membership, overcoming the current fragmentation and situation (at least for large entities). Gold plating It is implemented by the national authorities. It is a temporary solution but it could speed up the process.
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