BBVA - Press Room

Speaking at yesterday’s Nueva Economa Forum in Madrid, BBVA’s Chairman & CEO, Francisco González, reflected on reforms to the financial system in the wake of the global financial crisis. He believes “global regulation and supervision must be reinforced, with greater co-operation needed to avoid market fragmentation.”

Francisco González also called for an overhaul of the financial system during his speech at the conference organized by the Nueva Economía Forum and the Wall Street Journal.

After introducing the President of the European Central Bank (ECB), Jean-Claude Trichet, Francisco González paid tribute to the ECB’s role in establishing the European Economic and Monetary Union and, particularly, the efforts being made during the current crisis. “Under the guidance of Jean-Claude Trichet, the ECB has managed to react decisively and swiftly without compromising rigor and prudence, boosting liquidity, slashing interest rates and contemplating unconventional measures. We are lucky to have Jean-Claude Trichet at the helm at such a difficult time,” stated Mr. González.

He also stressed the importance of “defining clear rules, shoring up the system, reducing the probability of future crises and improving the mechanisms used to resolve any possible problems.”

He believes “global regulation and supervision must be reinforced, with greater co-operation needed to avoid market fragmentation.” Francisco González referred to President Obama’s “New Foundation” which “explicitly demonstrates the need to improve international regulatory standards and increase international co-operation.” He also noted that “Europe’s move toward a system of micro- and macro-prudential supervision is a step in the right direction and the ECB’s role in the new supervisory systems is greatly appreciated.”

He did add, however, that “the market must continue to be the basis for the smooth running of the financial system. Regulation must be better, more complete, more coordinated and more effective but we must avoid over-regulation,” he stressed. In this regard, Francisco González remarked that government aid will lead to market fragmentation and distort competition. “Any government measure that hampers competition will immediately create moral hazard problems and be detrimental to those entities that have acted with rigor and prudence,” he affirmed.

Mr. González also stated that “no set of rules, however suitable, can guarantee stability unless they are based on ethics, transparency, prudence and good governance.” He therefore believes that “regulatory and supervisory bodies must oversee a balanced and open competitive framework where suitable behavior in line with these principles is encouraged.” Ending his speech, the Chairman & CEO recalled that these principles are one of BBVA’s three pillars, along with people and innovation.