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

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News
    News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News
    News

    FCA Proposes More Measures to Help Insurance Customers Amid Crisis

    FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.

    October 21, 2020 WebPage Regulatory News
    News

    EBA Issues Opinion to Address Risk Stemming from Legacy Instruments

    EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.

    October 21, 2020 WebPage Regulatory News
    News

    ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020

    ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).

    October 21, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.

    October 21, 2020 WebPage Regulatory News
    News

    APRA Initiates Action Against a Bank for Liquidity Compliance Breach

    APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.

    October 21, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2

    PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Reduce Impact of Large Bank Failures

    US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.

    October 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6004