“The measures passed at the G-20 summit in Pittsburgh are the right approach for dampening the risk appetite of certain financial institutions which triggered the global financial crisis,” the Executive Directors of the Austrian Financial Market Authority FMA, Helmut Ettl and Kurt Pribil, announced. The FMA Executive Directors mentioned in particular certain key measures, including: rendering more stringent, both in terms of quantity and quality, the rules governing the capital requirements for financial institutions and making these rules counter-cyclical; rendering the markets for derivative products more transparent and more closely supervising these markets; and developing more efficient and effective instruments to be able to even shut down, by means of special insolvency laws for banks, financial institutions that are no longer competitive, without endangering market stability. “Of particular importance is the renewed commitment to creating a truly global regulatory framework and to intensifying and strengthening international cooperation among regulators,” Ettl and Pribil stated. The plans thus support and consolidate at the global level the measures which have already been initiated by the EU. These measures include: subjecting rating agencies and alternative investments to closer supervision; rendering the markets for derivative products and securitised loans more transparent and more sensitive to risks; and establishing and expanding a system of cross-border supervisory colleges for the purpose of supervising institutions active on a transnational basis. The FMA also explicitly welcomes the call for regulatory frameworks which raise the capital and liquidity requirements for system-relevant institutions and which impose more stringent supervision on these institutions, considering the tremendous economic costs of any detrimental development. “It is now imperative to swiftly implement these measures without watering them down,” the FMA Executive Directors added.
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