Gfma :

Regulatory Roundup

EBA recommendations could lead to "EuroTARP"
The European Banking Authority recently published its recommendations for recapitalising the region's banks, and its term sheet for convertible capital securities. In the process, the EBA might have created a framework for a European version of the US Troubled Asset Relief Program. "In harmonising the rules for these instruments, the EBA's term sheet echoes the four-page term sheet that the US authorities set out in 2008 with regards bank preference shares, in that it has set out a harmonised structure for a potential EuroTarp," said Khalid Krim, head of hybrid capital structuring at Morgan Stanley. The Wall Street Journal/Financial News(09 Dec.)

BIS appears to endorse central banks' coordinated effort
The Bank for International Settlements indicated its support for a coordinated effort by several major central banks. "A freezing of interbank markets in major funding currencies, as during the recent crisis, may require the ability to supply official liquidity in major currencies in an elastic manner," the bank said. "Only the currency-issuing central banks have this ability." The BIS also suggested that the Bank of England's 2009 and 2010 asset purchases might not have had the impact that the central bank estimated. MarketWatch(12 Dec.), Bloomberg(12 Dec.), The New York Times (tiered subscription model)/DealBook blog(11 Dec.)

Bundesbank head says governments must resolve debt crisis
Jens Weidmann, president of Germany's Bundesbank, dampened expectations that the European Central Bank might extend its role, and said the region's governments must resolve the sovereign-debt crisis. "The mandate for redistributing taxpayer money among member states clearly does not lie in monetary policy," Weidmann said in an interview. "Financing of sovereign debt through central banks is and remains forbidden by treaty." Bloomberg(12 Dec.)

New UK financial watchdog seeks broad authority over banks
The Financial Policy Committee, a new financial risk watchdog in Britain, is seeking broader powers to avoid governments having to rescue financial institutions, according to Andrew Haldane, an official at the Bank of England and a member of the FPC. "I hope in time the FPC policy actions will be sufficiently understood, that the signal itself is enough to engineer a change in tack by banks lending and borrowers borrowing," Haldane said. Reuters(09 Dec.)