15 June 2021  Remarks for AFME/OMFIF European Financial Integration Virtual Conference Thank you for inviting me to deliver this address for your conference today. The theme of the conference – European financial integration – is both a timely and timeless one. On the one hand, the pandemic has further underlined the benefits of previous initiatives related to financial integration in Europe, most notably the banking union and its core components. On the other hand, the past year has also refuelled longstanding debates and discussions on the need for European further financial integration. Yet a prerequisite for a successful and enduring financial integration at the European level is for Europe itself to be aligned with global financial standards in order to achieve a truly global level-playing field. As such, my remarks today, which are primarily in my capacity as Chair of the Basel Committee, will focus on the crucial importance for Europe to implement the Basel III framework in a full, timely and consistent manner. Financial stability is a global public good. In a world with integrated financial markets, preserving global financial stability requires global minimum standards that are applied consistently and in full by all jurisdictions. This was indeed the motivation for initial Basel standards in the 1980s following the Latin American debt crisis. And it remains just as important today. Covid-19 has highlighted the clear benefits and importance of having a global and prudent set of regulatory standards for banks.
It also finds that potential deviations from the globally agreed Basel III reforms – for example, with regard to the output floor – would significantly dilute the benefits to the real economy. 2/3  To sum up, there are clear and significant benefits to all from implementing the Basel III standards in a full, timely and consistent manner in Europe: -  For households and businesses, it would reduce the probability and impact of future banking crises, and provide banks with the capacity to maintain lending in both good times and bad. -  For European banks, such an implementation would shore up their resilience by fixing some of the outstanding frailties in the banking system. It would also avoid any stigma and negative signalling to financial markets about their noncompliance with global standards. The pandemic has further reminded us that the benefits of a resilient banking system should not be taken for granted. -  For policymakers, it would help safeguard global financial stability and avoid the risk of a harmful “race to the bottom” in bank prudential standards. And it would serve as an important input towards greater financial integration in Europe. Europe has a strong track record of playing a lead role when it comes to multilateralism and sticking to global agreements. Now, more than ever, it is crucial for Europe to continue to demonstrate these traits, including with regards to globally agreed prudential standards.