Brave New World for Banks? No

Jonathan Hill, European Commissioner for Financial Stability, Financial Services and Capital Markets Union, delivered the keynote speech to the 2015 European Banking Federation Conference. Entitled “A Brave New World for Banks”, having enumerated the diverse challenges that European banks face imminently and the longer-term demographic doom, Commissioner Hill concludes:

“I cannot promise you a Brave New World for banks, not least because I believe that getting the response right to the many challenges you face lies in your own hands”

The phrase “Brave New World” has run the gamut from ironic in Shakespeare’s The Tempest to the terrifying dystopia in Huxley’s novel of the same name. Doubtless recalling such negative connotations, Commissioner Hill instead envisages a “utopia” characterised by

“a competitive banking sector that supports growth and benefits society. A diverse banking sector that operates within rules that are proportionate to risk. A banking sector at the heart of the European economy that has regained the trust of European citizens.”

The promised land is to be reached by the following paths :

• Finalise Bank Structural Reform Rules
• Initiate proposals for a CCP Recovery and Resolution framework
• Finalise the Money Market Funds Regulation
• Undertake a comprehensive assessment of the impact of existing legislation with a view to the balance between stability and growth, with particular regard to the CRR
• Publish the Action Plan for Capital Markets Union at the end of this month

The keynotes of the keynote are: legislate less and legislate better, improve existing legislation with the benefit of extensive stakeholder feedback. There seems little to object to in the above blueprint, except to shoehorn in a final literary reference, even the “best-laid schemes o’mice and men gang aft a-gley”.

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