With so many regulations being released by different bodies, is now the time for bankers to pause and absorb their impact?

In an off-the-record conversation, a senior banker admits to me that he doesn’t have time to read all the documents being released by the various regulatory bodies.

“At the start [of post-crisis regulation] I read everything. But the amount of material is now too vast so I have to be selective,” he says.

This kind of sentiment dovetails with the prevailing idea that what banks most need now is a regulatory pause while they absorb all the many initiatives. Correspondingly what the industry needs is a comprehensive understanding of how all the different regulations work together and whether or not there are or will be unwanted or perverse outcomes – something commentators have been warning about for some time.

Obviously such sentiments could be interpreted as yet more banker whinging and simply ignored. Surprisingly this is not what is happening – or at least not in the second case.

The European Commission has launched just such an exercise as part of its action plan for building a Capital Markets Union. In a consultative period running until January 6, 2016, it wants submissions on rules that are impacting negatively on economic growth, unnecessary regulatory burdens, inconsistencies and unintended consequences.

It is likely that the commission’s inbox is going to be busy. The impact of regulations on the ability of banks to lend, especially to small enterprises and long-term for infrastructure (such that pension funds and insurance companies are taking these assets instead), the decline of liquidity especially in corporate bond markets and the decline of market-making by the banks should generate a vigorous response among many other topics.

But what about a pause in regulation until the current ones have been absorbed? That seems less likely, although the call for it is coming from senior figures, some of whom have been considered regulation hawks until now.

Former Swiss central bank governor and now vice-chairman of BlackRock, Philipp Hildebrand said at the recent FT Banking Summit in London: “I strongly believe the time has come to reach closure on the reform agenda. I certainly don’t mean that we should declare mission accomplished but a lot of changes with profound implications have been enacted and surely this is now the right time to pause and take stock.”

Could it happen? A few months back no one could have anticipated a regulatory impact assessment from the European Commission, so maybe the idea of a regulatory pause is not so far fetched.

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