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
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.