Policymakers should not allow banking sector reform of the Basel II framework to fall prey to dwindling commitment and political interests, Deutsche Bundesbank President Axel Weber said Friday.
"Only a coordinated and harmonized effort will enable us to ensure financial stability and thus pave the way for steady and sustainable global development," Weber said in his keynote address at the 9th Munich Economic Summit.
Weber, a European Central Bank Governing Council member, said the financial crisis, though in its third year now, still poses many challenges. He added that the number challenges has not decreased, but their nature has changed.
As markets stabilized and recovery started taking off, the focus has shifted from managing the current crisis to preventing future crises. "And a cornerstone of this attempt to create a more stable financial system is the reform of banking regulation."
Weber said, the regulations proposed in the reformed Basel II framework will strengthen the existing rules and will not change their underlying principles. "The Basel II framework seeks to limit banks' risk-taking behavior by making it more expensive and thus less attractive."
He noted that the reform of the Basel II framework was rightly given preference by regulators and should be implemented with priority by policymakers. Regardless of its actual design, the general objective of regulation on the microprudential level is to have a first line of defence by reducing the likelihood of individual bank failures, the central banker asserted.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.