The request comes as Europe searches for ways to keep up economically with the U.S. and China — a major focus of leaders like French President Emmanuel Macron, who said this week that the EU “could die” if its economy falls behind globally and should embrace a more protectionist agenda if it wants to survive.
The three EU heavyweights want a regulatory pause for finance rules, saying the bloc should “shift gears and regain its capacity to compete in the global arena” and “put stronger emphasis on the competitiveness of the financial sector, particularly banking.”
As part of this hiatus, the countries believe the EU should change tack on its rollout of global bank capital standards, after delays of the same rules in the U.S. due to heavy lobbying from the banking industry.
The letter calls on the EU executive to prepare legislation to change the global bank capital standards, called the Basel rules after their origination at the Basel Committee on Banking Supervision, in case the U.S. decides to “diverge significantly” from the internationally agreed rules.
Trump-proofing banking rules
With the U.S. election just weeks away, regulators are concerned that if Donald Trump wins a second term in office he could abandon the American rollout of the rules entirely. The letter says the U.S. is “expected” to diverge from the rules, without mentioning Trump by name.
The Basel rules, which aim to make bank lending safer following the 2008 global financial crisis, have been written into EU legislation and are set to kick off on Jan. 1, 2025 — although one aspect has already been postponed for a year, relating to how banks cover market risks. The overall framework was agreed internationally nearly seven years ago, in December 2017.