Karolin Schriever advocates pragmatic approaches in Europe

Karolin Schriever, Executive Member of the Board of the German Savings Banks Association (DSGV), called for a realignment of financial market regulation in Europe. At the DSGV press meeting held during the Annual Meetings of the World Bank Group and the International Monetary Fund (IMF) in Washington D.C., she said: “Since the financial market crisis, European financial markets have implemented a large number of regulatory measures to make the system safer. In many fields, however, regulatory requirements have overshot the mark. What we need now is not more regulation, but a wiser, pragmatic approach.”

Schriever drew attention to the United States, where smaller banks were exempt from many regulations to give them more flexibility. Tailor-made regulation was important for financial institutions and crucial for businesses. In this context, Schriever emphasised the importance of a strong partnership between the financial sector and the real economy. “Our economy needs regulation which does not constrict us, but lets us breathe,” she said. This is the only way for Europe to develop on a par with other regional economic communities and to safeguard its prosperity.

Schriever cited recent requirements for sustainability reporting as an example of excessive regulation. “Instead of gathering hundreds of performance indicators, reports should be focused on meaningful and manageable data.” It was crucial to give positive incentives to businesses and consumers to support their path to a more sustainable development.

“The Green Asset Ratio has a fundamental flaw which should urgently be corrected. While the idea is well-intentioned, it has been poorly executed,” said Schriever. Only investments which met certain reporting obligations were considered to be sustainable. This was true especially for larger publicly traded companies. However, many financing options used by small and medium-sized enterprises were excluded. Schriever: “Anything that is already green is given a positive rating. That’s not okay. In our view, it is much more effective to support the change from ‘brown’ to ‘green’, making transformation progress more visible, because visibility inspires a passion for performance. That should be acknowledged and promoted.” 

Schriever emphasised that Germany had the potential to master the challenges – if it made the right policy decisions. “What we need is smart regulation, partnership with the real economy based on trust and stability, as well as positive incentives to support businesses and consumers on their path towards a more sustainable future.”