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ECB's Weber says Basel III bank capital rules must be flexible

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European Central Bank policymaker Axel Weber called on Wednesday for local wriggle room to implement globally agreed rules like the tougher Basel III capital requirements for banks.

"At a general level, there is no doubt that an internationally harmonized approach is necessary," Weber, who is president of Germany's Bundesbank until May, told a financial regulation conference in Frankfurt.

"Nonetheless, uniform international principles have to be adapted to heterogeneous national structures," he added.

A "one size fits all" approach could be harmful on national financial systems, Weber said.

How the European Union will put into law the globally-agreed Basel III accord from 2013 is being "hotly debated," Weber said.

Some supervisors want a "regulation" which is directly binding on EU states, leaving little if any room for the local interpretation that a "directive" contains.

"For the European Commission, it would definitely be easier to enforce common standards through a regulation but this approach would leave only very limited leeway for member states to accommodate country-level differences or to deal with any unintended consequences that emerge after the rules have come into effect," Weber said.

Several regulators and industry executives have recently expressed fears that some countries in Europe such as Germany and France are seeking local variations in the Basel III requirements.

Britain's Financial Services Authority has warned against attempts to water down the accord when the Commission publishes its draft law later this year.

"We want the European Union to pick up the Basel III rules and faithfully put them into European law without tightening or loosening," FSA Chairman Adair Turner told reporters last week.

U.S. regulators have also expressed concerns that some parts of Europe may be seeking to dilute Basel III locally.

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