COPENHAGEN, Jan 30 (Reuters) - European Central Bank Governing Council member Erkki Liikanen, who led a working group on bank regulation reform, stuck to the group’s view that separating banks’ trading from retail banking activities was key to limiting risks inherent in the business.
European Commissioner Michel Barnier expressed caution on Wednesday over calls to separate some high-risk trading operations within banks from their market-making role.
Market-making activities were crucial to the broader economy, the EU official in charge of financial regulation told the Financial Times.
The paper said Barnier’s comments signalled a retreat from plans to force lenders to build barriers around their securities trading operations.
But Liikanen on Wednesday warned against loosening the proposals.
“The mandatory separation of the riskiest trading activities from deposit banking is a key step for limiting the impact of these risks,” Liikanen said in the text of a speech to be given at the Danish Institute of International Affairs.
“Separation of activities is the most direct instrument for tackling banks’ complexity and interconnectedness.” (Reporting by Johan Ahlander, writing by Sakari Suoninen)