Bloomberg News

G-20 to Tackle Banking Union After 28 Global Lenders Named

November 01, 2012

A global list of 28 systemically relevant financial institutions will be published today in advance of a meeting in Mexico of finance officials from the world’s biggest economies, a German government official said.

The Nov. 4-5 meeting of Group of 20 officials will discuss Europe’s plans for banking union and the 28 system-relevant banks, the German official told reporters in Berlin today on condition of anonymity because the G-20 negotiations are ongoing and private.

Germany, which has pressed for measures to shield taxpayers from bailing out the biggest global banks, is backing efforts by international regulators to extend a push against companies deemed too big to fail. The Financial Stability Board last year decided to list 29 so-called globally systemic banks that should hold more capital.

It’s “an important step” that G-20 countries agreed last November that global banks “deemed ‘too big to fail’ will face requirements going forward that this will no longer be paid by the community, by the citizens,” German Chancellor Angela Merkel told lawmakers in Berlin last year.

Germany will press G-20 finance ministers and central bank governors gathering in Mexico City this weekend to tackle financial market regulation as a central theme, the official said. He compared the issue to rowing against the current; you have to keep up the strokes or you’ll be pushed back down the stream.

Crisis Blame

Germany is also determined to rebuff any efforts by fellow G-20 partners to pin the blame for the world’s economic slowdown on the sovereign debt crisis in the 17-nation euro area, the official said.

To that end, Finance Minister Wolfgang Schaeuble will deliver a “keynote” speech in Mexico on the current status of crisis-fighting plus longer-term efforts to put the euro on a sounder footing and resolve the turmoil.

Greece, the country at the center of the crisis, thrust itself on to the G-20 agenda at a leaders’ summit in the French resort of Cannes in November last year, when Merkel and then- French President Nicolas Sarkozy opened up the possibility for the first time of expelling Greece from the euro.

While big questions remain open regarding Greece, especially over the country’s debt sustainability, Greece won’t feature much in the G-20 discussions in Mexico, the German official said.

The big focus in Mexico will be on how to underpin global economic growth, while voting reform at the International Monetary Fund, energy and revisiting past commitments to halve budget deficits will also feature on the agenda in Mexico, the German official said.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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