Transcript Viktorija Proskurovska

10th Inter-Balkan Forum of Banking Associations
16 October 2009 - Sarajevo, Bosnia & Herzegovina
European Banking Sector
in a period of Global Financial and Economic
Crisis
Viktorija Proskurovska
Adviser, Economic and Monetary Affairs and Relations with Associates
of the European Banking Federation
Significance of the crisis
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Evaporation of liquidity in the inter-banking market;
Bankruptcies of financial giants, causing systemic risk;
Loss of public trust in the financial sector;
Deterioration in general economic conditions;
Increase of the government share in the private sector
(causing unlevel playing field).
Global estimated loss: USD 3.4 trillion (about € 2.3 trillion).
EU GDP might fall by 4% in 2009,
US GDP may decrease 2.6% in 2009.
www.ebf-fbe.eu
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Reaction of banks
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Reflect on their weaknesses;
Reduce their costs and improve returns;
Clean-up their balance sheets;
Adapt their business strategies.
www.ebf-fbe.eu
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Reaction of the ECB
and national governments
More liquidity and capital:
• Euro-area Governments committed about 35% of GDP to
financial sector support measures;
• Eurosystem’s balance sheet had almost doubled.
Negative consequence:
• Increased public ownership in the EU banking sector.
www.ebf-fbe.eu
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Regulatory response by the
European Commission
EU Commission is working on the body of legislation on:
• supervisory architecture;
• capital requirements;
• accounting principles;
• remuneration policies;
• hedge funds, UCITS, etc.
Aim:
to ensure the right incentives, reduce gold-plating, and
strengthen risk management and prudential oversight.
www.ebf-fbe.eu
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The EURO
• Benefits of euro membership:
– confidence in the currency (avoid sharp devaluation during
crisis);
– ECB measures to enhance market liquidity enabled euro area
countries to avoid a credit squeeze.
• Challenges:
– Differences in the pricing of euro member countries’ debt and
credit default insurance have widened.
www.ebf-fbe.eu
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Conclusion
Current EU-level priorities are:
– Need for effective government exit strategies;
– ECB to continue facilitating the working of financial markets;
– EU authorities to finalise their proposal for the Regulation on
banking supervision;
– banks to continue their operations while reforming internal
procedures.
www.ebf-fbe.eu
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Thank you!
For contacts:
Viktorija Proskurovska
Adviser in Economic and Monetary Affairs, Associates
European Banking Federation
[email protected]
www.ebf-fbe.eu
www.ebf-fbe.eu
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