16th Oct 2014 12:46
LONDON (Alliance News) - New regulations governing banks and financial institutions must be applied consistently across jurisdictions, Bank of England Deputy Governor Jon Cunliffe said on Thursday, in a warning that a lack of mutual trust among those responsible for implementation of the reforms would have damaging consequences.
Speaking at the British Bankers? Association?s annual conference, Cunliffe, who is the Bank of England?s deputy governor responsible for financial stability, said that the financial crisis signalled a "seachange" in jurisdictions? willingness to work together, but that there remain questions as to whether jurisdictions are able to trust others when it comes to implementation.
Cunliffe cautioned that a failure to ensure that regulators and supervisors can trust the implementation of rules in other jurisdictions could result in the taking of action to defend domestic stability.
The cost of defensive action, such as ring-fencing of capital and liquidity or non-recognition of foreign firms, would be a rolling back of financial globalisation, as well as a risk of a race to the bottom and regulatory arbitrage, Cunliffe said.
?Some globalisation has been reversed since the financial crisis as a result of regulation and risk aversion,? Cunliffe said.
In the same panel discussion, Sherard Cowper-Coles, senior adviser to the group chairman and group chief executive, HSBC, said the greatest threat to the banking industry is the regional variation of regulation, providing an insight as to why the banking giant has disposed of or exited more than 70 businesses since 2011.
Although differences in regulation in different regions is a concern for the sector, there was an acceptance that global harmonisation is not a realistic goal.
Marisa Lago, assistant secretary for international markets and development, US Department of the Treasury, said: ?There are too many traditions, legal frameworks for global harmonisation. We should be looking at outcomes-based equivalents.?
By Samuel Agini; [email protected]; @samuelagini
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