Eurogroup chairman Jeroen Dijsselbloem rejected calls for banking union regulations to be loosened after weeks of falling bank shares, saying new European bail-in rules had caused investors to look “more critically” at risks borne by banks.
Speaking on radio, Dijsselbloem, also the Dutch finance minister, said stricter rules imposed after the 2007 financial crisis that would restore confidence in banks.
“We now have much stricter rules for who pays the bill if banks go wrong, and it’s not the taxpayer,” he said.
“For that reason, investors are looking much more critically at banks, and that is leading to a correction on equity markets.”
The Stoxx Eurozone Banks Index has fallen more than 25% since the beginning of the year, prompting policymakers including Bank of Italy governor Ignazio Visco to call for a more gradual introduction of rules that place the burden of propping up failing banks on investors.
But Dijsselbloem said this would be “the worst possible thing to do.”
“We must first make the banking union stronger in my view,” he added.
“Capital requirements should go up further in coming years. That would strengthen confidence in banks.”
Dijsselbloem also said Europe’s economic outlook remained cautiously positive.
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