reform

Ralph Atkins

Jean-Claude Trichet is expected to throw down the gauntlet to the eurozone’s political leaders by setting out extensive proposals for preventing future financial crises in the 16-country region. The ECB president is due to speak to the European parliament today, expanding on a document released last week.

The ECB wants to rule out any expulsion from the eurozone, as even admitting the possibility could undermine its stability. Eurozone finance ministers would become “the guardian of fiscal sustainability”, with governments’ tax and spending decisions policed by an independent agency. There would also be more penalties for fiscal miscreants – and a “traffic light” system of intensifying surveillance for countries losing competitiveness. 

A single banking regulator for the US has just been proposed by a key Senate committee. The suggestion is not new. A single regulator was suggested in 1993 by then treasury secretary Lloyd Bentsen, following a wave of thrift and bank failures. The proposal, to consolidate all four federal banking regulation and supervision agencies, went nowhere.

Sixteen years later, the Obama administration proposed to reduce the four agencies to three, by eliminating the Office of Thrift Supervision through consolidation with the Office of the Comptroller of the Currency. But critics argued this would “allow financial groups to continue to shop for the weakest regulator”