Featured Product

    William Coen of BCBS on the State of Global Financial Regulation

    October 13, 2017

    Mr. William Coen, Secretary General of the Basel Committee, spoke about the state of global financial regulation, at the 2017 IIF Annual Membership Meeting in Washington DC. He provided an update on the Basel Committee's work to finalize the global regulatory framework as well as its longer-term agenda. He said, “we are now close to finalizing these reforms, which will provide clarity and certainty to supervisors and market participants alike.” Global policy agenda is virtually complete and must be seen to its completion.

    With regard to finalizing the post-crisis reforms, he highlighted the progress made toward completing Basel III revisions, including the capital output floor; addressing the step-in risk, and allowing national discretions for the net stable funding ratio’s (NSFR) treatment of derivative liabilities. At national discretion, the required stable funding treatment for derivative liabilities can be reduced from 20% to no lower than 5%. He said that the Committee will continue to work on this issue and will consult if a change to this treatment is proposed. However, the existing proposal should facilitate the implementation of NSFR, which is due to begin on January 01, 2018, given that most jurisdictions have already published their final or draft rules. In context of the capital floor, he opined “If we stop now, we will not have satisfactorily addressed the thorny issue of unwarranted variability in risk-weighted assets (RWA). Indeed, we see that RWA compression continues in some cases, even though risks have not really been scaled back. Also, all the other revisions to the global regulatory framework the Committee has worked on and agreed during the past two years would be discarded. These include updating the standardized approaches for credit and operational risks and adding restrictions to the use of internal ratings-based approaches. The floor is only one element among many that comprise this package of reforms.” He emphasized that “these revisions are real improvements to the framework used by the vast majority of banks around the world.”

    Once finished, the next step is to assess the impact of individual standards and how they work in combination; the broader, macro impact of the revised framework; and the incentives arising from the new standards, including regulatory arbitrage. “We need to keep our focus on improving supervision. Better, more effective and forward-looking supervision is a never-ending quest. A combination of effective supervision and robust standards is absolutely necessary to enhance the safety and soundness of the banking system, ” said Mr. Coen. BCBS will continue to closely monitor the implementation of global Basel standards. Next week, BCBS will publish its 13th progress report on the adoption of the Basel regulatory framework, along with the final four assessment reports on implementation of the liquidity coverage ratio.

     

    Related Link: Speech

    Keywords: International, Banking, Basel III, Capital Floor, Step-in Risk, NSFR, Next Steps, BCBS

    Featured Experts
    Related Articles
    News

    SEC Finalizes Capital and Margin Requirements for Security-Based Swaps

    SEC adopted a package of rules and rule amendments to establish capital, margin, and segregation requirements for security-based swaps, under Title VII of the Dodd-Frank Act.

    August 22, 2019 WebPage Regulatory News
    News

    ECB Revises Prudential Provisioning Expectations for New NPEs

    ECB is revising its supervisory expectations for prudential provisioning of new non-performing exposures (NPEs) specified in the “Addendum to the ECB Guidance to banks on non-performing loans” (Addendum)

    August 22, 2019 WebPage Regulatory News
    News

    CFTC Proposes to Revise Information Collection on Margin Requirements

    CFTC is requesting comments on the burdens associated with certain aspects of the Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants (final rule).

    August 21, 2019 WebPage Regulatory News
    News

    FASB to Delay Effective Date for Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant all insurance companies that issue long-duration contracts, such as life insurance and annuities, additional time to apply the standard that addresses this area of financial reporting.

    August 21, 2019 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.9

    EBA published phase 2 of its technical package on the reporting framework 2.9, which includes validation rules, Data Point Model (DPM) data dictionary, and XBRL taxonomies.

    August 21, 2019 WebPage Regulatory News
    News

    FSB Publishes Responses to Its Consultation Related to SME Financing

    FSB published responses received to the consultation on a report on the evaluation of the effects of financial regulatory reforms on small and medium-sized enterprise (SME) financing.

    August 21, 2019 WebPage Regulatory News
    News

    APRA Revises Related Entities Standard for Banks

    APRA published a strengthened prudential standard APS 222 on associations with related entities, with the aim to mitigate contagion risk within banking groups.

    August 20, 2019 WebPage Regulatory News
    News

    EBA and ESMA Issue Joint Response to EC Letter on Crypto-Assets

    EBA and ESMA issued a joint response to the EC letter, from July 19, 2019, on crypto-assets.

    August 20, 2019 WebPage Regulatory News
    News

    FSB on Responses to Consultation on Wind-Down of Trading Portfolios

    FSB published responses received to the consultation on the solvent wind-down of the derivatives and trading book portfolio of a global systemically important bank (G-SIB).

    August 19, 2019 WebPage Regulatory News
    News

    FSB Publishes Responses to Consultation on Resolvability Disclosures

    FSB published responses received to the consultation on disclosures for resolution planning and resolvability of banks.

    August 19, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3681