IMF published a paper that summarizes the results of its annual survey on the macro-prudential policy in member countries. The paper details the survey design and describes the results from the first edition of the survey, based on responses received from 141 jurisdictions (out of total 192 jurisdictions). It reviews institutional arrangements in place across the members, summarizes the types of measures reported across regions, and describes the recent changes in macro-prudential policy settings reported by member countries. This database is the first global source of information on institutional arrangements supporting macro-prudential policy across countries.
The results show that 141 countries reported a total of 1,313 macro-prudential measures, with an average number of measures per country being 9.3. Among the broad-based tools, the capital conservation buffer (CCB) is the most frequently used measure (in place in 76 countries). The CCB is more frequently used in Europe, compared to most other regions, because this measure has been required since early 2016, under the Capital Requirements Regulation and Directive (CRR/CRD IV) framework of EU. Additionally, the Basel III countercyclical capital buffer (CCyB) was activated with a positive rate in three jurisdictions (Sweden, Hong Kong SAR, and Norway), as of the end of 2016. Then, CCyB was activated in three more jurisdictions (Slovak Republic, Czech Republic, and Iceland) during 2017, with the UK also announcing a positive buffer rate for 2018. Although the number of countries with a positive buffer requirement appears low, 73 economies reported that they had in place a CCyB framework; this includes the 12 economies that introduced the framework during 2017.
A leverage ratio cap has been introduced by 35 countries, with its use expected to rise as the leverage ratio moves from a monitoring requirement to a limit under Basel III in 2018. Forward-looking loan-loss provisioning requirements are tools that are being applied outside the Basel framework and are quite common in both the Western Hemisphere and in Asia. Broad-based caps on credit growth are also imposed in some countries, even as they are very rare in Europe (with Albania being the only country reporting this tool).
Related Link: Annual Macro-Prudential Survey
Keywords: International, Banking, Basel III, Macro-prudential Policy, CCyB, CCB, IMF
Previous ArticleESMA Introduces Its Approach for Analyzing Operational Risk
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.