FAKP – We care about your money

For banking supervision

The reform of banking supervision is just off the table. Apparently, we have learned nothing from the past. It has long been clear that the financial crisis has failed spectacularly. In these points is need political action. The one-sided look at the rules ignores one thing, namely that rules are only in certain cases. Banking supervision has the task to identify and prevent violations of the rules. In the current legal form BaFin fights but with blunt weapons. A transfer of the BaFin in a GmbH would be an important step. For a limited liability, company can pay salaries and acquire marketable Sun competent staff.

In addition, the supervision given more independence. Third, they should with an independent commission /similar to the Monopolies Commission/ to enter into a technical debate. Thus, a strong oversight will be ensured. Of course, one could also make the rules so easily, and then you do not need expensive and lobby-prone regulatory apparatus in principle. Here is an example:

  • Separation of investment banking, retail banking and mortgage banks
  • Prohibition of the transactions of these groups to each other (and transitive)
  • Prohibition on proprietary trading by retail banks in the securities business
  • Limiting the total assets of an individual institution to e.g. 50% of the GDPs
  • Increase in reserve ratios at the ECB
  • Negotiations on new provisioning requirements for banks

Negotiations on new provisioning requirements for banks

Dr. Matthes from the Institute of the German Economy in Cologne is sceptical. The width of reform proposals, this time enormously and probably unique in history. Negotiations on new provisioning requirements for banks show more transparency in derivatives trading. The same is true with respect to reforms of executive compensation and accounting rules to increased involvement of hedge funds and credit rating agencies in regulatory and supervisory structures, as well as regular monitoring of the implementation of already adopted reforms.

Nevertheless, the prospects for significant reform progress yet is bleak. The casus Knaxus is here to get all the states under a regulation hat. However, this will be difficult. The bank tax and regulatory rules only work if all countries participate. Otherwise, it will open new loopholes, which could make things worse.

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