US, Europe 'agree' on controls
By Glenn Somerville and Gernot Heller |
May 28, 2010, Friday
|
Print Edition
Print Edition
UNITED States Treasury Secretary Timothy Geithner said the US and Europe broadly agreed on the need for controls on risk taking but should ensure they do not impede recovery.
"I think we all agree we want more conservative restraints on capital and leverage," Geithner told a news conference with German Finance Minister Wolfgang Schaeuble in Berlin yesterday.
There was broad agreement on the need for controls "on risk taking, more conservative capital requirements, bringing transparency and disclosure to derivatives markets, making sure that regulators and supervisors can do their jobs in protecting the economy from risk and these things," Geithner said.
But this must be designed carefully so that it "makes the system more stable in the future but doesn't create a risk of financial headwinds to the recovery we are seeing happening."
He did not refer to earlier criticism of his German hosts over their unilateral move last week to ban naked short-selling of certain assets, which spooked financial markets and angered Germany's European Union partners.
Schaeuble said the US and Germany were more in agreement on the approach to regulation than it might seem.
"As far as what could be done or what needs to be done with financial market regulations, we're actually a lot closer with our assessments than it might appear at times," Schaeuble said.
"But it's clear one also has to keep in mind that the traditions and structures of the financial sectors in the US are naturally quite different than in continental Europe," he said. "And that's why not everything that goes in the same direction can be translated one-to-one for both areas."
Geithner said that ahead of next month's Toronto G20 summit there had been progress on a framework for the global financial system, meaning leaders were "in a very good position to put in place a much better system than we had coming into this crisis."
Geithner said the US was committed "to cover the cost of this crisis and the cost of future crises by imposing a fee on the largest financial institutions" and welcomed backing for this approach in Europe, including from Germany.
He said global recovery and a return to growth required "clear commitments to restore gravity to our fiscal positions over time," while recognizing that different countries had "different room for manoeuvre."
"I think we all agree we want more conservative restraints on capital and leverage," Geithner told a news conference with German Finance Minister Wolfgang Schaeuble in Berlin yesterday.
There was broad agreement on the need for controls "on risk taking, more conservative capital requirements, bringing transparency and disclosure to derivatives markets, making sure that regulators and supervisors can do their jobs in protecting the economy from risk and these things," Geithner said.
But this must be designed carefully so that it "makes the system more stable in the future but doesn't create a risk of financial headwinds to the recovery we are seeing happening."
He did not refer to earlier criticism of his German hosts over their unilateral move last week to ban naked short-selling of certain assets, which spooked financial markets and angered Germany's European Union partners.
Schaeuble said the US and Germany were more in agreement on the approach to regulation than it might seem.
"As far as what could be done or what needs to be done with financial market regulations, we're actually a lot closer with our assessments than it might appear at times," Schaeuble said.
"But it's clear one also has to keep in mind that the traditions and structures of the financial sectors in the US are naturally quite different than in continental Europe," he said. "And that's why not everything that goes in the same direction can be translated one-to-one for both areas."
Geithner said that ahead of next month's Toronto G20 summit there had been progress on a framework for the global financial system, meaning leaders were "in a very good position to put in place a much better system than we had coming into this crisis."
Geithner said the US was committed "to cover the cost of this crisis and the cost of future crises by imposing a fee on the largest financial institutions" and welcomed backing for this approach in Europe, including from Germany.
He said global recovery and a return to growth required "clear commitments to restore gravity to our fiscal positions over time," while recognizing that different countries had "different room for manoeuvre."
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