WHAT ARE THEY ARGUING ABOUT?
● Europe is trying to implement the Basel III internationally agreed regulations aimed at making banks safer. The EU version of the rules is currently a 600-page piece of regulation known as “CRD IV” and it has proven to be the most controversial financial reform currently under negotiation.
● The biggest row is over the powers states should have to water down or beef up the rules, such as whether they can tack on an extra three to five per cent onto banks’ minimum capital requirements.
● France and Germany want a more lax regime to suit their banks, whereas the UK, Sweden and Spain want a tougher regime with the freedom to beef it up further on a national level.
● There is also a fight over the definition of capital for banks that own insurers, whether liquidity requirements should be included in some form, and how stringent any leverage ratio should be.
● There is another meeting of finance ministers on 15 May, where the row will doubtless continue.