In order to protect customers’ deposits from high-risk transactions in large universal banks, there have been several calls – and at the beginning of 2014 also from the EU Commission in the form of a draft law – to ban trading in financial products in the banks’ own name and for their own account. However, it should be permissible to spin off proprietary trading operations into a company established for this purpose, but acting at its own risk and legally independent in every respect. The ban on proprietary trading would affect around thirty banks in the EU and around twelve institutions from Switzerland, the USA and Japan that have branches in the EU. – Critics of the ban legislation propose instead that the institutions concerned should be forced by the supervisory authority to report their proprietary trading transactions on a daily basis, broken down precisely by individual type. At the same time, the supervisory authority should be given the right to impose restrictions on banks’ proprietary trading if there are signs that excessive risks are being taken. – See bank, systemic, financial market interdependence, contingent damage, financial stability, confidence in size, Lehman failure, Liikanen Report, overkill, regulatory, regulatory frenzy, Sifi oligopoly, straitjacking, systemic relevance, too big to fail principle, overregulation.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/