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Finance Watch welcomes supervision of bank deleveraging

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27 October 2011, Brussels

Finance Watch is pleased that EU leaders have called on bank supervisors to protect the real economy from bank deleveraging; this is a topic we raised in an open letter to them last week.

“By asking bank supervisors to ensure that the flow of credit to the real economy is maintained, EU leaders have not only taken the right measure but also reminded banks that the role they play in financing the productive economy is both essential and more important from society’s standpoint than their other activities,” said Finance Watch Secretary General, Thierry Philipponnat.

“Supervisors must now ensure that banks which choose to shrink their balance sheets focus on reducing their derivatives and trading portfolios first.

“They must also ensure that existing real economy credit is not arbitrarily withdrawn and can be renewed on reasonable terms.

“The challenges for building a sustainable banking system remain extremely daunting but this supervisory measure is a step in the right direction,” said Mr Philipponnat.

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