ECB Warns Against Lowering Bank Capital Requirements
Claudia Buch argues that cutting capital buffers would fail to boost lending while risks remain high. She notes that weak demand is the primary credit constraint.
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European Central Bank chief supervisor Claudia Buch urged Eurozone governments on Monday afternoon to maintain current bank capital requirements despite calls for deregulation. EU lawmakers are reviewing capital rules to help local banks compete with rivals in the United States. Buch argues that cutting buffers will trigger higher shareholder payouts rather than increasing credit supply to households.
