Today we launch a new report, produced in conjunction with leading economic consultancy Oxford Economics and the International Regulatory Strategy Group (IRSG), entitled Balancing growth and stability in EU financial reform. The report identifies the need for financial reform that ensures systemic stability but also allows well-managed risk-taking in the pursuit of economic growth.
The report, launched at our event for policymakers in Brussels, comes at a key moment as governments and regulators continue to reappraise the global regulatory architecture in the wake of the banking crisis. It highlights that while new regulatory measures such as an effective resolution regime are required to restore confidence in the financial system, it is essential that policymakers take account of the costs of new regulatory measures, not only on the financial services sector, but across the wider EU economy.
Chris Cummings comments: "Given the large and visible costs of financial instability for society as a whole, it is right for policymakers to make the avoidance of financial crises a high priority. But it is also important to recognise that regulation carries a range of impacts that can dilute the benefits to consumers and the wider economy from a vibrant financial services sector.
"The industry is a driver of growth. It helped European companies raise €126bn last year for business investment. It employs nearing 10m people throughout Europe, nearly 5% of the total EU workforce contributing 6% of the Union's economic output. Our report provides a framework to inform the policy debate on financial regulation in Europe, and by extension the future of Europe's financial system and its entire economy. TheCityUK and its members look forward to engaging with policymakers in the EU and its member states to create the conditions in which Europe's savers, companies and taxpayers regain full confidence in the stability of the financial system."
Nadia Calviño, Deputy Director-General in DG Internal Market and Services at the European Commission responded to the report: "The Commission welcomes this report as a timely contribution to the regulatory debate. I agree with the report that regulation should be carefully calibrated to ensure that it has a positive cost/benefit analysis and does not unjustifiably impact on growth. We follow this principle in our legislative drafting, with detailed impact assessments. We also believe that international coordination on regulatory reform is key and that the G20 is the right forum for this. We look to our key international partners to fully implement G20 commitments."
Mr Jens Tholstrup, Managing Director of Oxford Economics further comments: "Our report clearly demonstrates why the future regulatory regime should strike a balance: regulating for greater stability should not prevent the financial system from providing capital and risk management to companies and citizens across the EU economy, in order to support sustainable economic growth."
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