Daily Archives: July 20, 2011

Claire Jones

The European Union today became the first jurisdiction to unveil proposals on how it intends to beef up its banks’ capital and liquidity buffers.

In terms of capital, the measures put European banks in line with Basel III in requiring them to hold common equity tier 1 capital of 4.5 per cent and total tier 1 capital of 6 per cent, up from 2 per cent and 4 per cent under the current regulatory regime.

That means the continent’s banks must raise a whopping €460bn in capital by 2019. Either that or shrink their balance sheets and shed risky assets.

But hold the applause. According to the IMF, this might not be enough.   Read more

The Bank of England’s latest minutes, out today, were more dovish than the previous month’s. So why did the pound climb against the dollar following their release? In all likelihood, as FT Alphaville’s Neil Hume writes, this was because the minutes failed to mention any additional support for QE2, reversing expectations among some investors that a second round of asset purchases was imminent.

The post is below.

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Claire Jones

ECB president Jean-Claude Trichet may be unwilling to cede to Angela Merkel’s calls to overrule ratings’ agencies judgement on a Greek default – selective or otherwise. However, Mr Trichet’s position on the big three’s dominance of the industry is in line with that of the eurozone’s political masters.

At both this month’s press conference and in an interview published Tuesday, Mr Trichet made it clear he agreed with German finance minister Wolfgang Schäuble’s point that the oligopolistic structure of the industry was far from ideal.

When asked whether he would favour the creation of a European rating agency – something which Ms Merkel has backed since before Lehman Brothers’ collapse – Mr Trichet was more oblique. Read more