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Q.5, Right to regulate

With regard to CETA Article X, Prudential Carve-out:

The prudential provision for registration of financial service providers, while a step in the right direction, is completely insufficient to maintain an adequate level of macroprudential financial regulation, which requires that all foreign (and domestic) financial service providers comply with all local prudential measures in their entirety, critically including

    Membership of local deposit insurance.
    Compliance with local solidity requirements.
    Compliance with the strictest local solidity requirements of all the countries an entity operates in, unless airtight compartmentalization is established between the balance sheets of business units in different countries.
    Adherence to whatever other rules and regulations that the local financial regulator might promulgate from time to time.

This provision of paragraph 4: "Such a prohibition may not apply to all financial services or to a complete financial services sub-sector, such as banking," seems hard to justify in the light of the record of entire sectors of the financial system that have joined in episodes, including recently, of financial folly.

On Safeguard measures:

The duration of exceptional safeguard measures should be improved to 36 months. The historical experience is that a major reorganization of a country's financial infrastructure puts the foreign exchange and international credit markets in a state of irrational excitability for 18 to 24 months. A 50 % supplementary security buffer would be advisable.

On Balance of Payments:

Discrimination should be permitted on grounds of different levels of current account imbalances - it should be permissible to discriminate against countries running overtly predatory CA surpluses.

Paragraph 5 on the time schedule should allow for the timetable to be revised, both upward and downward, based on the difference between reality and the expected course of events the timetable is based on.

Paragraph 6 is mistaken in calling on the IMF. The IMF's estimates and projections have been repeatedly and recently demonstrated to be at a substantial divergence with observable reality.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Jul 6th, 2014 at 12:38:55 PM EST

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