New global rules making the financial system safer won't be seamless and could be revised soon to help economic growth, senior government and regulatory officials said on Thursday.
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Since the financial crisis struck in 2007-8, governments have agreed to a welter of regulations forcing banks to hold more capital and trade derivatives more safely.
But differences are emerging as individual jurisdictions turn principles into rules on the ground, creating problems for cross-border banks and markets that have to comply with them.
The European Union and United States have been in talks for months to find ways of ensuring their rules for derivatives don't clash to such an extent that they snarl up the market.
A U.S. official said complete harmony on financial rules would not be possible.
"I don't hold out the hope that we are going to have absolute global harmonization, we come from too many different traditions, too many different legal systems," Marisa Lago, an official at the U.S. Treasury told the British Bankers' Association annual conference.
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"Setting harmonization as the goal sets us up to failure. What we should be looking at is outcomes-based equivalents. If we set that as the target we have a good chance of getting there," Lago said.
Some regulators want legally binding global regulation to stop national discrepancies but Thursday's comments signal a more pragmatic approach to global rulemaking is emerging.
Jon Cunliffe, Deputy Governor of the Bank of England, said it will be years before there is any international law to govern the financial system as there is no global government.
As the heavy bout of rulemaking makes way for implementation and pressure also mounts to spur economic growth, regulators are becoming more open to reviewing the rules sooner rather than later if they risk stifling growth.
Banks have repeatedly called for a review of the overall impact of all the new rules, arguing that some need re-calibrating to avoid capital markets being fragmented and making it less attractive for lenders to aid economic growth.
"I think that after all the regulations have been put in place, we need to take a holistic view of the impact of the regulations," Jose Vinals, director of monetary and capital markets at the International Monetary Fund, told the conference.
"Let's re-examine the cost benefit analysis and let's see if there is anything that needs some recalibration in order to strike the best balance between safety and efficiency and capacity in the financial system to support growth," Vinals said.
"So far I think the benefits far outweigh the costs."
Cunliffe said globalization of the financial market has been rolled back since the financial crisis, some of it because of new regulation.
"A key determinant (on whether this will continue) is whether the global reinforced governance machinery can now pivot from the design of new international regulatory standards to implementation," Cunliffe said.
Without consistent implementation across the world, there was a risk of a "race to the bottom" or of regulators building walls around banks, Cunliffe said.
Sharon Bowles, a former senior EU lawmaker who helped to approve many of the bloc's new financial rules, said policymakers were entering an era where the regulation that has been adopted is being "constantly tweaked" and expanded into other areas.
(Additional reporting by Steve Slater and Matt Scuffham; Editing by Mark Potter)