Featured Product

    FED Paper Examines Impact of Governance Structures on CCyB Decisions

    February 18, 2020

    FED published a paper that examines whether governance structures for macro-prudential policies affect decisions to implement Basel III macro-prudential capital buffers. The paper presents empirical evidence that stronger governance for macro-prudential policies significantly increases the probability of using the countercyclical capital buffer (CCyB). The analysis also shows that stronger governance increases the sensitivity of this probability to credit growth, consistent with taking actions to mitigate financial stability risks.

    The study finds that the probabilities of using CCyB are higher in countries that have financial stability committees with stronger governance mechanisms and fewer agencies, which reduces coordination problems. The probability of the use of CCyB by a country is even higher when financial stability committees or ministry of finance have direct authority to set the CCyB; this might be because setting the CCyB involves establishing a new macro-financial analytical process to regularly assess systemic risks and allows these new entities to influence the traditional process of writing rules. The study finds that only some of the new multi-agency committees—specifically, those with tools or those with fewer member agencies—are consistent with a functional delegation motive. While countries may prefer to create these committees mainly for improved communication, large committees or those with weak governance mechanisms may actually hinder effective decision-making.

    The study also shows that the institutional arrangements and establishing clear responsibilities for new tools have a measurable effect on decisions. New authorities with tools and accountability can have a significant effect on using the CCyB. The study does not find that central banks with direct powers are more likely than independent bank regulators to use the CCyB or increase the minimum systemically important bank surcharge, although central banks are involved in multiple ways in these decisions. For the CCyB, they are the direct authority in 34 countries (wherever they are also the prudential regulator) and they make formal recommendations in five more countries. However, the study does not find a distinct effect for the central bank from the prudential regulator for any of the macro-prudential capital buffer decisions.

     

    Related Link: Paper

     

    Keywords: Americas, US, Banking, CCyB, Basel III, Systemic Risk, Macro-Prudential Policy, Financial Stability, FED

    Featured Experts
    Related Articles
    News

    BIS Paper Studies Impact of Fintech Lending on Small Businesses in US

    The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.

    September 26, 2022 WebPage Regulatory News
    News

    UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks

    The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).

    September 26, 2022 WebPage Regulatory News
    News

    EBA Launches EU-Wide Transparency Exercise in 2022

    The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.

    September 23, 2022 WebPage Regulatory News
    News

    SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks

    The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."

    September 22, 2022 WebPage Regulatory News
    News

    EC Rule Lists Advanced Economies for Market Risk Capital Calculations

    The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.

    September 21, 2022 WebPage Regulatory News
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News
    News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8521