23/07/2025

BIZ & FINANCE WEDNESDAY | JULY 23, 2025

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Bessent calls for deeper US bank regulatory reforms, dropping dual capital proposal

WASHINGTON: US Treasury Secretary Scott Bessent on Monday called for deeper reforms of what he called an antiquated financial regulatory system and said regulators should consider scrapping a “flawed”, Biden-era proposal for a dual capital requirement structure for banks. Speaking at the start of a Federal Reserve (Fed) regulatory conference, Bessent said excessive capitalisation requirements were imposing unnece ssary burdens on financial institutions, reducing lending, hurting growth and distorting markets by driving lending to the non-bank sector. “We need deeper reforms rooted in a long-term blueprint for innovation, financial stability and resilient growth,” Bessent said in prepared remarks. The Trump administration is pursuing a broad reform agenda aimed at cutting rules governing financial institutions, including capital requirements, arguing that such actions will boost economic growth and unleash innovation. Bessent said regulators have for too long pursued a “reactionary approach” that has weakened competitiveness and

NO ‘IRRATIONAL’ TRADING SEEN,YUAN REMAINS STABLE: REGULATOR BEIJING: China’s foreign exchange regulator said yesterday that it has not seen “irrational” trading activities for now. Li Bin, the deputy head of the State Administration of Foreign Exchange, said that the yuan has been trading basically stable at reasonable and balanced levels so far this year. Overseas investors in general have increased their net holdings of onshore equities and bonds in the second quarter of this year, Li told a press conference here. He added that supply and demand in the foreign exchange market are basically stable. – Reuters TAIWAN JUNE EXPORT ORDERS EXCEED ANALYSTS’ EXPECTATIONS not derive from a principled calibration methodology. It was motivated simply to reverse-engineer higher and higher capital aggregates,” Bessent said. “It also was at odds with capital reform as a modernisation project because it would have preserved the antiquated capital requirements as the binding floor for many, perhaps most, large banks.” Bessent also called for regulatory capital relief not just for large banks but also at the smaller, community bank level. One solution, he said, would be to allow any bank not subject to moder nised capital requirements a choice to opt in. “This would result in a meaningful reduction in capital for those banks,“ Bessent added. While he said Treasury would prioritise financial regulatory policy that puts American workers first and prioritises growth, he said regulators needed to carry out statutory mandates for financial safety and stability and consumer protection. “Rationalising and tailoring regulation does not have to amount to regulatory weakening,” Bessent said. – Reuters

led to byzantine regulations. The Treasury chief, who earlier on Monday called on the Fed to review its operations to safeguard its monetary policy independence, said the Treasury would take a stronger role in driving reform efforts by regulators, including the Fed. “To that end, the department will break through policy inertia, settle turf battles, drive consensus, and motivate action to ensure no single regulator holds up reform,” Bessent said of the Treasury. Banking regulators should consider abandoning the dual structure proposed in July 2023, but never enacted, that would have seen banks comply with the higher of two different methods of measuring their risk capital require ments. The proposal, which came after the high-profile failure of Silicon Valley Bank and other institutions in 2023, would have significantly increased the amount of capital banks needed to set aside for potential losses. It drew intense oppo sition from the industry. “This dual-requirement structure did

Bessent speaking to reporters at the US Capitol in Washington DC June 27. On Monday, he called for regulatory capital relief not just for large banks but also at the smaller, community bank level. – REUTERSPIC

Next Thai central bank chief champions rate cuts

BR I E F S

prioritising the nation’s interests, free from the influence of any groups,” Vitai wrote on his Facebook page on July 8. Vitai studied economics and law at Thailand’s Chulalongkorn and Thammasat universities, and finance at Drexel University in the United States, and entered the Thai private sector, where he worked at Charoen Pokphand Group and budget carrier Nok Air.

to save some policy ammunition, after cuts in October, February and April. Those reductions brought the one-day repurchase rate to 1.75%, the lowest in more than two years. “Proactive easing is important,” Vitai told Thai financial daily Krungthep Turakij on June 20, when he was locked in the race for the top job with central bank insider Roong Mallikamas. “It’s not just another one or two cuts. We may have to reduce them for a long time and more deeply. So, from 1.75%, if you ask me personally, I think it can go down much further.”

BANGKOK: Vitai Ratanakorn, the incoming governor of the Bank of Thailand (BOT), by his own admission, will start his new job in October at a difficult time. o Incoming governor says proactive easing important

TAIPEHL Taiwan’s export orders rose more than expected in June ahead of what was expected to be the last month of a pause on US import tariffs, with demand for the island’s tech and artificial intelligence-related products continuing apace. Export orders rose 24.6% year-on-year in June to US$56.77 billion (RM240.19 billion) and registered their fifth consecutive monthly gain, the Ministry of Economic Affairs said yesterday, beating analysts’ expectations for an increase of 22.9%. Overall orders from China were up 15.4%, versus a fall of 2.4% in May.Orders for goods from Taiwan are considered a bellwether of global technology demand. For July, the ministry said it expeActed export orders to rise between 7.9% and 11.9% from a year ago. – Reuters Prospects of India-US interim trade deal ahead of tariff deadline ‘dim’ Growth in Southeast Asia’s second-largest economy has stalled, tense negotiations with the United States over trade tariffs continue, industrial sentiment is tepid and critical sectors, including tourism and manufacturing, aren’t firing. “We must accept that the Thai economy is not doing so well,” Vitai, who has been approved by the Cabinet as the next central bank chief but awaits royal endorsement, told reporters last week. “And what is worrying is the sluggishness that may be prolonged.” The 54-year-old, who currently serves as president and chief executive of the Government Savings Bank, Thailand’s largest state-owned lender, has a prescription: more rate cuts. The central bank late last month left the key interest rate unchanged, underlining the need Thailand’s ruling Pheu Thai party, which took power in 2023, has been at loggerheads with current BOT chief Sethaput Suthiwart narueput for not cutting rates enough to support a sluggish economy. In May last year, before she became prime minister, Pheu Thai leader Paetongtarn Shinawatra said the central bank’s independence was an “obstacle” in resolving economic problems, underlining the scale of the friction. Vitai’s stance will likely tone down some of that conflict, but it has also raised questions about his own ability to lead the central bank without succumbing to pressure from the ruling party – an issue he has publicly addressed. “I am confident that I can make decisions independently, based on principles and A former colleague, who worked alongside Vitai at a private firm, described him as a team player who preferred to work with consensus. “He is more of a practicalist than a theorist, focusing on getting the job done,” he said, asking not to be named because he is not authorised to speak to media. In 2018, Vitai was appointed the secretary general of the Government Pension Fund, which manages assets worth about 1.4 trillion baht (RM183.7 billion), and two years later became the head of the Government Savings Bank. Thirachai Phuvanatnaranubala, a former Thai finance minister, said Vitai’s long experience as a government banker should help him manage relationships with senior finance ministry leadership. “However, his lack of work experience and zero exposure to high level macro public policy is a cause for concern.” – Reuters

NEW DELHI: The prospects of an interim trade deal between India and the United States before Washington’s Aug 1 deadline have dimmed, as talks remain deadlocked over tariff cuts on key agricultural and dairy products, two Indian government sources said. US President Donald Trump threatened a 26% tariff on Indian imports in April but paused implementation to allow for talks. That pause ends on Aug 1, though India has yet to receive a formal tariff letter, unlike over 20 other countries. India’s trade delegation, led by chief negotiator Rajesh Agrawal, returned from Washington after a fifth round of talks without a breakthrough. “An interim deal before Aug 1 looks difficult,

The sources requested anonymity as negotiations are not public. The Indian commerce ministry and the USTrade Representative’s Office did not immediately respond to emailed requests for comments. Separately, South Korea’s new finance minister and the country’s top trade envoy will meet in Washington with US counterparts on Friday for talks on US tariffs, Finance Minister Koo Yun-cheol said in Seoul yesterday. The country’s foreign and industry ministers will also visit the US for trade discussions as early as this week, Koo told reporters after a meeting of economic ministers. Koo took office on Monday. – Reuters

temporary, as both countries aim to sign the deal over time,“ he said. US Treasury Secretary Scott Bessent told CNBC on Monday that the Trump administration was more concerned with the quality of trade agreements than their timing. Asked if the deadline could be extended for countries in talks, he said it was up to Trump. Indian officials remain hopeful of clinching a broader deal by September or October, in line with what was agreed by Prime Minister Narendra Modi and Trump in February. “Given that there have been five rounds of negotiations and another U.S. delegation is expected, we remain optimistic about finalising a trade pact,” a third government source said.

though virtual discussions are ongoing,” one of the Indian government sources said, adding a US delegation was expected to visit New Delhi soon to continue negotiations. Talks are stalled as New Delhi is refusing to open its politically-sensitive agriculture and dairy sectors, while Washington is resisting India’s demand for relief from higher tariffs on steel, aluminium and autos. Officials are exploring if these issues can be deferred to a later stage, after an interim deal, the second Indian official said. Ajay Sahai, director general of the Federation of Indian Export Organisations, warned sectors such as gems and jewellery could be hit hard if 26% tariffs are imposed. “However, this could be