Featured Product

    Lael Brainard of FED Offers Update on the Financial Stability Agenda

    April 03, 2018

    The FED Governor Lael Brainard provided an update on the financial stability agenda of FED in New York. According to her, the primary focus of financial stability policy is tail risk (unlikely but severely damaging outcomes), as opposed to the modal outlook (the most likely path of economy). She highlighted that FED’s financial stability work has four interdependent pillars: systematic analysis of financial vulnerabilities, prudential policies to safeguard individual banking organizations, macro-prudential policies that build resilience in the large, interconnected institutions, and countercyclical policies to address cyclical risks.

    She discussed the improvements in the health of banking sector since the financial crisis, highlighting the increased regulatory capital, design of stress-testing framework, and subdued risks (by historical standards) associated with leverage in the financial sector. Issuance of securitized products remains well below the pre-crisis levels for most asset classes, with few signs of securitizations that involve maturity or liquidity transformation and limited issuance of complex securities whose opaque structures can contain significant leverage. Additionally, the available data suggest that leverage at nonbank financial firms has been stable. On December 01, 2017, with overall risks assessed as moderate and with the other routinely monitored measures sending a similar signal, FED announced its decision to leave the countercyclical capital buffer (CCyB) at its minimum value of zero. She added that assessment of financial vulnerabilities is a key input into the FED decisions on the setting of the CCyB, along with a variety of other model-based and judgmental criteria. "It is worth noting that, although U.S. structural buffers are on the stronger end of the range internationally, the U.S. banking system is also among the healthiest and most competitive in the world. Credit growth is robust, and banks are registering strong profitability relative to their international peers," said Ms. Brainard.

    Finally, she reiterated that “We undertake systematic assessment of financial vulnerabilities as an important input into our policymaking processes--helping to calibrate the prudential, macro-prudential, and countercyclical policies that are our first lines of defense, in addition to informing Federal Open Market Committee, or FOMC, deliberations because of the important feedback loops between financial conditions and our dual-mandate goals.” She added that this work is complemented by the efforts of FED’s domestic (FSOC and FFIEC) and international partners (FSB and IMF).

     

    Related Link: Speech

    Keywords: Americas, US, Banking, Financial Stability, CCyB, FED

    Related Articles
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    EC Amends Rule on Mapping of External Credit Assessment Institutions

    EC published the implementing regulation (EU) 2019/2028, which amends Regulation 2016/1799, regarding the mapping tables specifying correspondence between the credit risk assessments of external credit assessment institutions (ECAIs) and the credit quality steps set out in the Capital Requirements Regulation.

    December 04, 2019 WebPage Regulatory News
    News

    EBA Issues Second Part of Advice on Implementation of Basel III in EU

    EBA published the second part of its advice on the implementation of Basel III in EU, which complements the report published on August 05, 2019.

    December 04, 2019 WebPage Regulatory News
    News

    EU Approves European Council Proposal on CCP Recovery and Resolution

    EU ambassadors approved the position of European Council on a proposed framework for clearing houses and their authorities to prepare for and deal with financial difficulties.

    December 04, 2019 WebPage Regulatory News
    News

    EIOPA Consults on Approach for Regulating Key Aspects of PEPP

    EIOPA launched a consultation on the proposed approaches and considerations for its technical advice and its implementing and regulatory technical standards, as mandated by the Pan-European Personal Pension Product (PEPP) Regulation.

    December 02, 2019 WebPage Regulatory News
    News

    ESMA Issues Guidance for Registration of Securitization Repositories

    ESMA published a guidance note on the process for registering securitization repositories under the Securitization Regulation.

    December 02, 2019 WebPage Regulatory News
    News

    European Council Appoints New Commission With Effect from December 01

    European Council appointed the new Commission for the period from December 01, 2019 to October 31, 2024.

    December 02, 2019 WebPage Regulatory News
    News

    BoE Governor Appointed as UN Envoy for Climate Action and Finance

    BoE Governor Mark Carney has been appointed as the United Nations (UN) Special Envoy for Climate Action and Finance.

    December 01, 2019 WebPage Regulatory News
    News

    PRA Publishes Annual List of G-SIIs and O-SIIs

    PRA released the annual list of UK firms designated as other systemically important institutions (O-SIIs), along with the 2019 list of UK-headquartered global systemically important institutions (G-SIIs).

    November 29, 2019 WebPage Regulatory News
    News

    EBA Publishes Report on Risks and Vulnerabilities in EU Banking Sector

    EBA published its annual report on risks and vulnerabilities in the EU banking sector.

    November 29, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4250