Featured Product

    Vicky Saporta of BoE Speaks on Future of Prudential Bank Regulation

    July 04, 2018

    In a speech at the Westminster Business Forum, Vicky Saporta of BoE discusses the importance of the reforms agreed in December 2017 that finalized Basel III. She goes on to describe what banking regulation will look like in the future.

    Ms. Saporta welcomed the finalization of Basel III as “a major milestone for regulators globally," as it puts in place the final elements of the reforms to banking regulation agreed since the crisis. She added that the central aim is to reduce the excessive variability of banks’ risk-weighted assets and, in doing so, make banks’ risk-based capital ratios more transparent and comparable. UK has developed a range of domestic reforms reflecting the importance of the banking system as a share of the UK economy. These range from the development and implementation of a new institutional framework for macro-prudential policy to deal with threats to financial stability, to the design of micro-prudential remuneration rules that better align risk-taking incentives with variable pay, to the Senior Managers and Certification Regime aimed at improving individual accountability at PRA-authorized institutions. It is also undertaking structural reform to protect retail payments and lending to households and businesses from shocks to other parts of banking groups specializing in serving wholesale customers.

    Looking ahead, Ms. Saporta said that industry should not expect a lot of further reform to bank regulation, particularly regulations regarding banks’ capital and liquidity. The focus of regulators, both in the UK and internationally, is pivoting toward three things: completing the implementation of the post-crisis reforms, making adjustments to the framework in response to new risks, and making adjustments to the framework in response to the unintended consequences. She also set out some principles that will guide us in ensuring that the adjustments made are appropriate. These principles provide that adjustments should be in line with the objectives of the regulation and/or of regulators, evidence-led, aim to address a problem that has been identified.

    Alongside some examples of where such adjustments have been made, she emphasized that horizon scanning and evaluation will be the key mechanisms in identifying other aspects of regulation that may require adjustment. In this context, she pointed to the ongoing evaluation exercise on central clearing incentives by FSB. She provided evidence that suggests that the current design of the leverage ratio is deterring banks that are most affected by the regulation from clearing over-the-counter derivatives on behalf of clients. In conclusion, she reiterated that BoE “will consider making adjustments to regulations in response to unintended consequences and new risks to ensure that the resilience we injected into the banking system post-crisis stands the test of time.” 

     

    Related Links

    Keywords: Europe, UK, Banking, Basel III Finalization, Basel III, Prudential Framework, BoE

    Featured Experts
    Related Articles
    News

    FSB Sets Out Effective Practices for Cyber Incident Recovery

    FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.

    October 19, 2020 WebPage Regulatory News
    News

    HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol

    HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.

    October 16, 2020 WebPage Regulatory News
    News

    FSB Sets Out Roadmap for Transition to Alternative Reference Rates

    FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).

    October 16, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on BRRD2 Transposition

    HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).

    October 15, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on CRD5 Transposition

    HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.

    October 15, 2020 WebPage Regulatory News
    News

    BoE Publishes Reporting Schedule for Statistical Returns

    In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.

    October 15, 2020 WebPage Regulatory News
    News

    EC Welcomes Declaration by Member States on EU Cloud Federation

    EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.

    October 15, 2020 WebPage Regulatory News
    News

    MAS Amends Notice on Issuance of Covered Bonds by Banks in Singapore

    MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.

    October 15, 2020 WebPage Regulatory News
    News

    FDIC Selects Technology Companies for Rapid Prototyping Competition

    FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.

    October 15, 2020 WebPage Regulatory News
    News

    GLEIF Defines New Validation Agent Role for Financial Institutions

    GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.

    October 15, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5979