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15 november 2012

European Commission's consultation on the Liikanen report

The FBF has just issued its response to the European Commission's consultation on the Liikanen report.


In this document, the FBF states its agreement with the report's objective to increase financial stability in Europe and protect European tax payers against bank failures and, to a large extent, its analysis of the crisis.

The FBF is satisfied to note that the report does not link the failure of a bank to its organisational structure, and that it recognises the universal banking model's effectiveness in serving customers. The working group indeed finds the concept of the universal banking model to be both resilient and beneficial to the economy as a whole in today's financial crisis.

It is therefore regrettable that the working group declined to sort market activities by their usefulness in financing the economy, which would have been in line with its reasoning thus far. Instead, the report puts forward a proposal based on a poorly-justified risk approach whose consequences on the European economy and the competitiveness of its banking sector have yet to be gauged. At a time when international financial regulations is restricting the use of credit, it would be highly damaging to deprive Europe of banks that are capable of supporting governments and businesses by ensuring the efficient operation of the market where their stocks are traded. In fact, these activities also fall under customer service and must be performed in the same entity as other activities.

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