Taxpayers Association of Europe calls for a relaxation of the Basel II rules
With a view to the looming credit crunch, the Taxpayers’ Association of Europe calls on the responsible policy makers to undertake an immediate review of the Basel II rules.
As Rolf von Hohenhau President of the Taxpayers’ Association states, the current lending practice that is inextricably linked with Basel II threatens the existence of many small and medium sized businesses. The pro-cyclical effects of Basel II means that just in a time of economic crisis, loans are terminated, credit lines are reduced and finance for investment is refused or made considerably more expensive. Often finance has even had to be secured many times over.
What is required, states Rolf von Hohenhau, is immediate action that leads to an easing of the capital requirements of Basel II. This could for example, take the form time-limited emergency legislation in order to enable the banks to be in a position to provide the economy with loans at reasonable rates.
Without a functioning class of small and medium sized businesses, there will be no overcoming of the crisis in Europe. The political decision-makers in Europe should be aware of this. The action must be done now and at a speed which is as high as was demonstrated with the rescuing of the banking system.
Munich/Brussels, March 9, 2010