Regulatory complexity holds the spotlight at OeNB conference

OeNB Macroprudential Policy Conference “Financial stability in 2030: Maintaining effectiveness while reducing complexity”

The OeNB’s Macroprudential Policy Conference, taking place at Palais Coburg on May 9, 2019, focuses on the future of financial stability in the European Union with the aim of developing a long-term vision for the year 2030. National and international policy makers seek to balance the trade-off between reducing the complexity of financial regulation and maintaining financial stability. At this one-day conference, high-level representatives from finance, politics and academia shed light on the drivers of complexity and explore ways to address them.

The costs of the global financial crisis have been high in all major economies and particularly high in the euro area. Improving the framework for financial stability has not only helped strengthen European Economic and Monetary Union (EMU) in recent years but has also brought the issue of regulatory complexity to the fore. “In the medium term, financial regulation should be less complex without increasing systemic risk,” said OeNB Vice Governor Andreas Ittner in his opening remarks. This conference provides a forum to discuss concrete proposals for realigning the incentive structure in the financial system.

From Ittner’s point of view, correcting flawed incentives for banks is one of the most effective contributions to reducing complexity. Solid macroprudential capital buffers, a robust deposit guarantee scheme and good resolution planning will be vital to ensure that the impact of a bank’s market exit on the financial system and the real economy is reduced significantly. “As a result, regulation could be greatly simplified,” Vice Governor Ittner emphasized. According to Ittner, for regulatory reform to succeed, it will take an EU initiative that tackles the problem in a sustainable way.