The officials want the EU to accept their tough standards in terms of bank capital and liquidity. Germany and Italy oppose the initiative.
According to the Wall Street Journal, after being badly burned by its hands-off regulatory approach before financial crisis, the U.K. has adopted rules requiring its banks to maintain thicker capital cushions and deeper liquidity pools than lenders in many other countries. But as a member of the EU, Britain generally is bound by rules devised by commissioners in Brussels, who are trying to impose a single set of banking rules for the entire 27-nation bloc.
The power struggle touches on multiple policy areas, but the fiercest fight is erupting around the so-called Basel III accord on bank capital and liquidity. The pact, worked out last year by regulators around the world, requires lenders to hold far greater reserves in an effort to prevent a repeat of the financial crisis.
Those rules now need to be transformed into laws in individual jurisdictions, including within the EU. In the face of aggressive lobbying from banks and some European governments, EU policy makers in Brussels have proposed relaxing aspects of the rules. And, in an attempt to develop uniform standards throughout the EU, Brussels policy makers also want to restrict the ability of individual European countries to set capital and liquidity requirements that exceed the EU rules.
A spokeswoman for the European Commission, the EU's executive arm, said: "In a closely integrated EU market for financial services, the decision on the right amount of capital requirements—whether it is Basel or more—should be taken for the entire market together."
The dispute spilled into public view this week. Mervyn King, governor of the Bank of England, said in a speech Wednesday night that he was "concerned that the European Commission will propose a weakening of the Basel standards" and that it "would be misguided…to prevent member countries from imposing higher capital requirements to protect the interests of domestic taxpayers." Speaking at the same black-tie event in central London, Treasury chief George Osborne echoed Mr. King's remarks.
The Bank of England is dispatching a team of senior officials to Brussels to lobby against the idea of curbing the authority of individual country regulators, according to people familiar with the matter. Mr. Osborne last month wrote to top European officials complaining about it.
FOREX.
The British Pound is under pressure for 2nd month in a row. It is forming the classic ABC pattern of Daily1. According to the Department of Masterforex-V trading system , the upward wave of Weekly 2 (initiated in May 2010) was completed after the price broke below the bullish MF pivot and sloping channel. Now GBPUSD is forming wave a(C ) or C of Daily1 within the framework of a retracement against the long-term trend. A break below 1.6057 will form a bearish FZR of the same wave level. The British Pound will gain support around the following levels: 1.5900, 1.5790 and 1.5640.
A rally along the major trend can be considered after GBPUSD break above the MF pivot and sloping channel (as shown below):
