Regulations: fpmi calls for in-depth breakdown of how much they encumber the business community
22. Feb 2011, Munich Financial Centre Initiative
The contours of the regulation of financial markets are emerging. Also becoming clear is that there will be a considerable price to pay for this body of regulation. As fpmi (the German abbreviation of “Munich Financial Center Initiative”) points out, this price will take the form of a reduction of the market volume of certain forms of financing and a worsening of their conditions of provision.
The result of these planned regulations will be a concerted decrease of the corporate own and outside financing provided via the banking sector. This will especially affect SMEs (small and medium-sized enterprises), since they have hardly any access to the alternative sources of financing provided by capital markets.
This scenario enhances the importance of companies’ adapting as expeditiously as possible to this new situation. To accomplish this, it is not sufficient to merely depict the impact of resultant encumbrances on GDP growth. Requisite, rather, is the detailing by the responsible parties of in which areas and to which extents the new regulations will alter the financing options and conditions available to the real economy. In addition, a critical and searching look has to be taken at the cumulative effects of the regulations, as these will further increase the encumbrances faced by the real economy.
The regulations and prospective developments whose impacts upon the real economy have to be detailed include
• the new Basel III rules
• the restricting of the financing provided to banks and manufacturers by insurers
• the financial transaction tax and
• the bank fee.
The Initiative also foresees the prospect of several non-EU member countries rescinding their regulatory approaches, so as to enable their real economies to profit from the comparative – vis-à-vis those in the Union – advantages to be induced through these measures. With this in mind, fpmi is calling upon the EU to make sure that the same or at least similar levels of regulation apply in it and in other areas. A key component of this call is the admonition not to engage in the senseless exercise in precautionary obedience arising from adopting ideas stemming from the USA that are subsequently not implemented by the latter. An example of this is the Financial Crisis Responsibility Fee, which was initially discussed and resolved upon in the USA but never promulgated – in contrast to what transpired in several European countries. A similar situation could take place in the case of the regulation of systemically important financial institutions.
The result of these planned regulations will be a concerted decrease of the corporate own and outside financing provided via the banking sector. This will especially affect SMEs (small and medium-sized enterprises), since they have hardly any access to the alternative sources of financing provided by capital markets.
This scenario enhances the importance of companies’ adapting as expeditiously as possible to this new situation. To accomplish this, it is not sufficient to merely depict the impact of resultant encumbrances on GDP growth. Requisite, rather, is the detailing by the responsible parties of in which areas and to which extents the new regulations will alter the financing options and conditions available to the real economy. In addition, a critical and searching look has to be taken at the cumulative effects of the regulations, as these will further increase the encumbrances faced by the real economy.
The regulations and prospective developments whose impacts upon the real economy have to be detailed include
• the new Basel III rules
• the restricting of the financing provided to banks and manufacturers by insurers
• the financial transaction tax and
• the bank fee.
The Initiative also foresees the prospect of several non-EU member countries rescinding their regulatory approaches, so as to enable their real economies to profit from the comparative – vis-à-vis those in the Union – advantages to be induced through these measures. With this in mind, fpmi is calling upon the EU to make sure that the same or at least similar levels of regulation apply in it and in other areas. A key component of this call is the admonition not to engage in the senseless exercise in precautionary obedience arising from adopting ideas stemming from the USA that are subsequently not implemented by the latter. An example of this is the Financial Crisis Responsibility Fee, which was initially discussed and resolved upon in the USA but never promulgated – in contrast to what transpired in several European countries. A similar situation could take place in the case of the regulation of systemically important financial institutions.