OECD published the report on its business and finance outlook for 2018. The report highlights that the financial system risk is elevated and global standards are essential in managing cross-border infrastructure investment. The gradual normalization of monetary policy in an environment of growing debt will be a major test of whether the Basel III regulatory reforms have achieved their goal of ensuring safety and soundness in the financial system.
Although capital rules have been strengthened, the business models of systemically important banks have changed little since before the crisis of 2008, says the report. One gauge of interdependence, the notional value of over-the-counter (OTC) derivatives, was USD 532 trillion in the second half of 2017, only slightly below its pre-crisis peak of USD 586 trillion in late 2007. The report also highlights that the financial outlook will also be shaped by the ability of China to manage risks related to high indebtedness and leverage in its banking, shadow banking, and wealth management industries. The extent of non-performing loans in China is obscured by the lack of information about which assets are sitting in off-balance sheet vehicles. These could disrupt growth beyond China if further changes to the structure of financial markets and institutions are not considered in major advanced and emerging economies. According to the report, open and transparent regimes for cross-border investment are needed to reduce costs and increase options regarding technology.
Keywords: International, Banking, Insurance, Securities, Basel III, Shadow Banking, OTC Derivatives, China, OECD
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
PRA published a statement to insurers that clarifies the approach to application of the matching adjustment during COVID-19 crisis.
EBA published a report on the implementation of selected COVID-19 policies within the prudential framework for banking sector.
EC launched a consultation to revise the network and information systems (NIS) Directive (2016/1148), which was adopted in July 2016 and is the first horizontal internal market instrument aimed at improving the resilience of the EU against cybersecurity risks.
PRA published a statement that outlines its view on the implications of LIBOR transition for contracts in scope of the “Contractual Recognition of Bail-In” and “Stay in Resolution” parts of the PRA Rulebook.
PRA published the policy statement PS15/20 to reflect additional resilience associated with higher macro-prudential buffers in a standard risk environment with a reduction in Pillar 2A capital requirements.
BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions.
FCA announced proposals that would provide continued support for certain consumer credit products to users, who are facing a financial impact because of the exceptional circumstances arising from the COVID-19 pandemic.
ACPR published a draft version of taxonomy RAN 1.4.0_PWD1, along with the related documentation, for Solvency II reporting.
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).