FSB Receives Feedback on Impact of Regulatory Reforms on SME Financing
FSB published the feedback it received on the effects of financial regulatory reforms on small- and medium-sized enterprises (SME) financing. About twenty organizations, including Moody's Investors Service, European Banking Federation, Bank Policy Institute, Institute of International Finance, NASDAQ, and World Council of Credit Unions, responded to this call for feedback. FSB, on February 25, 2019, had requested stakeholder feedback on the specified issues and it will use the feedback to prepare its draft report on SME evaluation, which will be issued for public consultation ahead of the June 2019 G20 Summit. The final report, reflecting the feedback from the public consultation, will be published in October 2019.
On February 25, 2019, FSB had also published a note that summarizes the main concerns raised in the FSB roundtable on the effects of financial regulatory reforms on SME financing. At the FSB roundtable, it was noted that, while internationally agreed reforms play a role, the interaction of the reforms with other domestic regulation and public policies, as well as how the regulation is implemented and interpreted by relevant authorities, ultimately determines the extent to which various economic actors, including SMEs, are affected. Basel III was identified by participants as the most relevant reform. Some participants expressed concern that banks may have increased the pricing and the proportion of secured SME lending—as well as reduced credit to riskier firms—including as a result of the reduced eligibility of collateral (both intangibles and physical collateral) for regulatory capital purposes. In that context, some participants raised the question of whether regulation strikes the right balance in terms of overall financing structure needs of SMEs. Other potentially relevant reforms that the participants identified included the following:
- Accounting rules (IFRS 9), which may incentivize banks to reduce the maturity of SME loans, to request higher collateralization, and to reduce credit availability in a downturn
- Insurance regulation such as Solvency II, preventing insurance companies from investing in securitizations of SME loans
- Domestic stress test frameworks, which may "disproportionally" affect SME finance because of the penalizing implicit risk-weight assumptions embedded in some of these tests
Related Links
Keywords: International, Banking, Insurance, Securities, Accounting, Regulatory Reform, SME, Basel III, Solvency II, IFRS 9, Responses to Calculation, FSB
Previous Article
EIOPA Publishes Report Related to the IORP II DirectiveRelated Articles
|
News
BoE, FCA, and MAS Announce Collaboration on Cyber SecurityMAS and UK financial authorities (BoE and FCA) announced that they will work together to strengthen cyber security in their financial sectors.
June 13, 2019
WebPage
Regulatory News
|
|
News
CBIRC Advisory Committee Holds Meeting, Discusses Regulatory IssuesThe first meeting of the International Advisory Committee (IAC) of CBIRC was held in Shanghai from June 11 to 12, 2019.
June 13, 2019
WebPage
Regulatory News
|
|
News
APRA Response to Proposal on Revisions to Capital Framework for BanksAPRA published a paper in response to the first round of consultation on proposed changes to the capital framework for authorized deposit-taking institutions.
June 12, 2019
WebPage
Regulatory News
|
|
News
APRA Finalizes Schedule on Scope of Variable Remuneration Under BEARAPRA has released a response letter and the final wording of the schedule in relation to how the Banking Executive Accountability Regime (BEAR) applies to variable remuneration arrangements for medium and small authorized deposit-taking institutions (ADIs).
June 12, 2019
WebPage
Regulatory News
|
|
News
EC Publishes Fourth Progress Report on Reduction of NPLs in EU BanksEC published the fourth progress report on the reduction of non-performing loans (NPLs) in banks in EU.
June 12, 2019
WebPage
Regulatory News
|
|
News
FASB Adds Taxonomy Entry Points in Relation to 2019 DEI TaxonomyFASB has incorporated additional entry points for the 2019 GAAP [Generally Accepted Accounting Principles] Financial Reporting Taxonomy and the 2019 SEC Reporting Taxonomy, in connection with the issuance of the 2019 Document and Entity Information (DEI) Taxonomy by SEC.
June 11, 2019
WebPage
Regulatory News
|
|
News
EC Publishes Draft Equivalence Decisions for Credit Rating AgenciesEC is requesting feedback on the draft implementing decisions on recognition of legal and supervisory systems of Hong Kong, Japan, Mexico, and U.S. as equivalent to the requirements of Regulation (EC) No 1060/2009 on credit rating agencies.
June 11, 2019
WebPage
Regulatory News
|
|
News
BaFin Consults on AFS Recommendation to Increase CCyB for BanksBaFin is requesting feedback on increasing the domestic countercyclical capital buffer (CCyB) to 0.25%, with effect from July 01, 2019, pursuant to Article 92(3) of Capital Requirements Regulation (CRR).
June 11, 2019
WebPage
Regulatory News
|
|
News
MAS Revises Capital Adequacy Requirements for Banks in SingaporeMAS issued amendments to the Notice 637 on risk-based capital adequacy requirements for banks incorporated in Singapore.
June 10, 2019
WebPage
Regulatory News
|
|
News
PRA on Modification by Consent of Definition of Capital Rules in CRR 2PRA announced its decision to offer a modification by consent of the Rules 7.1 and 7.5 of the Definition of Capital Part of the PRA Rulebook.
June 10, 2019
WebPage
Regulatory News
|
