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E U Block On Making Banks Safer.

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European Union ministers, especially French and German finance ministers, are trying to restrict the powers available to the UK's new Financial Policy Committee, which has its first meeting today. That was a warning - in not very coded form - given last night in the Mansion House speech by the Chancellor, George Osborne.

A new European Union Capital Requirements Directive, as currently drafted, would make the new 7% ratio of equity capital to assets, set out in the Basel III global agreement, the maximum ratio that regulators in Europe could impose on banks.

This, according to Treasury sources, would make it impossible for the FPC to force British banks to hold more capital, as a protection against losses and to slow down lending, as and when the FPC spots a new bubble, such as a renewed and worrying boom in the housing market.

Looks like the EU hates the idea of a stable banking system in their back garden.

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didn't basel II kick of the credit crunch in the first place? (basel II forced banks to hold onto more capital and bring things back on balance sheet, mad dash for assets and no lending, and the credit crunch happened)

Not really - the ponzi scheme choked on it own effluent - the ultra loose monetary polcies created so much debt and inflation it crippled consumption, which then exposed the whole edifice for what it was.

They are playing the same game again and hoping for a different outcome, this time with the debt loaded onto the taxpayer.

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  • 439 Brexit, House prices and Summer 2020

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      • down 5% +
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