Economic growth has been picking up in the eurozone, but the minimal level of inflation indicates the region requires significant stimulus if its recovery is to continue, European Central Bank President Mario Draghi said. He told the European Parliament's committee on economic affairs that to build stronger price pressures, "we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation".
Because the House bill to repeal and replace the Dodd-Frank Act is running into resistance in the Senate, Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said he is prepared to negotiate. Hensarling said he is receptive to separate votes on relaxing requirements imposed on community banks and raising the threshold for designating banks systemically important.
The US economy didn't slow down as much as economists expected in the first quarter, the Commerce Department said. The agency raised its GDP growth estimate to 1.2%, a modest improvement over the 0.7% pace it reported in April.
Greek Finance Minister Euclid Tsakalotos called on the International Monetary Fund and eurozone finance chiefs to end their delay in agreeing on bailout plans for Greece, saying the country has implemented all the required reforms. Greece hopes for a favourable decision in June so the country can be included in the European Central Bank's bond-buying programme.
Bundesbank President Jens Weidmann praised French President Emmanuel Macron's commitment to keeping his country in compliance with eurozone debt rules. Weidmann said "an economically strong France" will benefit the entire eurozone.
French officials are holding serious talks with a number of financial institutions considering a move out of London as Brexit draws nearer, said French central bank head Francois Villeroy de Galhau. He said Paris would make an attractive venue.
EU institutions are nearing agreement on rules that would govern a framework intended to inject life into Europe's securitisation market. The only big issue remaining is how to calculate risk and capital charges for banks participating in securitisation deals.
Dealers and risk managers have voiced criticism of standardised rules for calculating risk, which was put forward in the Basel Committee on Banking Supervision's Fundamental Review of the Trading Book. They say the rules' wording is open to interpretation and could result in heavier charges for hedged commodity positions, with one manager outlining a likely risk scenario that he says would be problematic.
Francois Villeroy de Galhau, a European Central Bank governing board member, said the EU's intended move toward single financial supervision must establish simple rules on bank capital, as well as closer communication between the ECB, the European Commission and national regulators. He said progress has been made but isn't complete.
European Central Bank President Mario Draghi has focused on the issue of euro-based financial instruments clearing after Brexit, saying the ECB must remain closely involved with these activities to maintain stability. His statement looks set to add a further threat to London's status as Europe's hub for derivative trades clearing.
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