April 6, 2017 / 2:31 PM / 8 months ago

Global watchdog asks banks to speak up over global rules

LONDON, April 6 (Reuters) - Banks should speak up about the benefits of international financial standards if they want to maintain a level playing field, a global regulatory official said on Thursday.

U.S. President Donald Trump’s call to scrap some banking rules has put the future of international rules into question, prompting warnings from the European Union not to undermine cross-border cooperation in regulation.

Svein Andresen, secretary general of the Financial Stability Board (FSB), which coordinates regulation for the Group of 20 economies (G20), urged financial firms on Thursday to show their support for global rules.

“Without international cooperation, or if international standards are not fully implemented, or set too low of a common bar, we risk fragmentation of the global system,” Andresen said in a speech in Malta.

Without naming the United States, he said that if global rules were not fully applied or weakened, it could lead to national responses to shore up resilience.

This would erode the willingness of regulators to rely on each other, Andresen said in the starkest warning yet from a global regulatory body.

“To avoid the potential risk of fragmentation, it is important that the private sector speaks up about the risks, and continues to engage productively and proactively with the authorities and make a clear case for the benefits of effective international standards,” Andresen said.

Trump’s stance on regulation has already led to talk among bankers that international bodies like the FSB and the Basel Committee, which sets global bank capital rules, risk being sidelined without backing from the world’s top capital market.

Work by the Basel Committee on finalising post-financial crisis banking rules has already been delayed to give Trump time to appoint a new top banking supervisor at the Federal Reserve.

Banks launched a vocal campaign against the finalisation of the rules, saying they represent a big increase in capital requirements, an outcome global regulators have dismissed. (Reporting by Huw Jones; editing by Susan Thomas)

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