LONDON – The debate over the degree that hedge funds should be regulated in Europe hots up with the publication of discussion papers from both Britain’s regulator, the Financial Services Authority (FSA), and the European Commission, in Brussels. While the papers reveal a reluctance to tighten regulation, there are strong pressures for some move in that direction. This is because of the rapid growth of hedge funds and their increasing appeal to a wider range of investors. The question regulators are struggling with is: if investor access to these types of fund is liberalised, should there be a corresponding strengthening of investor protection?

BONN, Germany – The results of the German test of the Basel II bank safety rules are encouraging, says Helmut Bauer, head of banking supervision at BaFin, Germany’s financial sector watchdog.

MOSCOW – The plodding pace of bank reform in Russia and the government’s push to reinforce state banks’ dominance are holding back improvement at private sector banks. Despite some regulatory advances during the last couple of years, the lack of political willingness to tackle major weaknesses in the banking sector prevails. This is the blunt assessment made by bank analysts at credit rating agency Standard & Poor’s in a report on the Russian banking industry, published in late June.

BASEL, Switzerland – Major challenges remain to the development of broader “systemic” perspectives for the regulatory regimes that try to bolster financial stability, the world’s oldest international financial organisation said in late June.

LONDON – The Committee of European Banking Supervisors CEBS), which advises on the technical aspects of the EU’s financial legislation, has set out proposals for selecting which credit rating agencies may be used for credit assessments under the new bank capital adequacy directive.

LONDON – Complying with the new Basel capital rules will easily have cost banks across the United Kingdom some £2.5 billion, according to estimates made by Accenture, the management consulting and technology services group. The figures are derived from a survey of 20 banks in the UK and Ireland undertaken in April and May, and published in late July. This was part of a wider survey covering a further 43 banks elsewhere in Europe and the US.

BRUSSELS – Europe’s top regulator says there seems no immediate solution in sight to the remaining accounting issue that’s holding up a final resolution of the difficulties in Europe over the IAS 39 rule on valuing financial assets and liabilities in new international accounting standards.

LONDON – European banking supervisors aim to streamline the process for approving the use by banks and investment firms of the more sophisticated approaches to assessing credit and operational risks under the European version of the global Basel II bank safety rules.

XBRL is the recommended common electronic language for European banks reporting under Basel II. EU regulators are giving full backing. Some say a sense of urgency is lacking.