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LONDON (AFP) –
Europe's new financial sector overlord on Monday sought to reassure London's bankers that new regulation introduced in the wake of the economic crisis would be both "smart" and "proportionate."
France's Michel Barnier, whose appointment at the end of last year raised fears in Britain of greater regulation from Brussels, told the British Bankers' Association that their institutions would continue to play an important role.
The bankers in London -- home to 80 percent of Europe's financial services funds -- warned that proposed new rules could make it more difficult to lend, which would slow economic recovery.
"An efficient and innovative financial sector will provide the engine to power our companies," said Barnier.
"To restore confidence, we need regulation. And much better supervision," he added.
"But smart, effective and proportionate regulation."
He outlined three main priorities: well supervised institutions, well capitalised institutions and responsible institutions.
Barnier, the European Union's internal markets commissioner, further urged "our American friends and other global partners" to work together to introduce a new financial rulebook.
Angela Knight, chief executive of the British Bankers' Association, said the main concern over new regulation was "that changes may have the effect of making it more difficult for banks to lend to businesses and individuals.
"This, in turn, will not help the economy recover."
"We are in danger of over-engineering stability -- and making too many changes at a rush -- at the expense of recovery and future growth in the wider economy," she added.
French President Nicolas Sarkozy compounded fears that Barnier's appointment would threaten the City of London's status as a top financial centre when he declared the British government the "big losers" of the competition for the EU's top jobs.
But Barnier has distanced himself accusations that he is driven by an interventionist ideology and appointed an Englishman, Jonathan Faull, as his right-hand man.
The Frenchman on Tuesday meets British Chancellor Alistair Darling, and George Osborne, finance spokesman of the main opposition Conservative Party.
Talks are also scheduled with the governor of the Bank of England, Mervyn King, and the head of Britain's Financial Services Authority, Adair Turner.
