Featured Product

    Andreas Dombret of Bundesbank Speaks on Regulatory Proportionality

    September 25, 2017

    Dr. Andreas Dombret of the Deutsche Bundesbank spoke about the German proposal on regulatory proportionality, at the strategy conference of the Rhineland Savings Banks and Giro Association on August 29, 2017. The speech focused on regulatory proportionality for small banks and savings banks with a regional footprint and examined how the regulatory landscape might evolve for these banks.

    He examined the chronology of actions taken and the ways explored toward embedding the principle of proportionality more deeply within the regulatory and supervisory frameworks. He also discussed the EC proposals for strengthening proportionality as part of the general overhaul of EU banking regulation, which is still an ongoing process. “These proposals would make major changes to the small print, and I am certain that we will be able to roll out a number of meaningful initial improvements. That said, the proposals don't go far enough—which is why we thought ahead.” To this end, he highlighted that a German discussion paper was put before the competent expert group of the EC in June this year. The paper proposes two paths toward greater proportionality and discusses the pros and cons of each: one path involves adjusting the existing regulatory framework and the second path involves creating a dedicated regulatory framework for small institutions (small banking box).


    According to Dr. Dombret, the German proposal adopts a three-tiered approach to greater proportionality. In this proposal, systematically important institutions with the potential to pose systemic risk will be subject to Basel III in full while medium-sized institutions will be provided with selective relief. A stand-alone supervisory regime, known as small banking box, has been proposed for the small, less complex institutions. The paper then proposes a classification criteria for categorizing the institutions into these three tiers. It proposes no proportionality for risk-based capital ratios, leverage ratio, and liquidity coverage ratio, emphasizing “that a lot of rules are not up for debate” and “that the very purpose of our joint proposal is to avoid unnecessarily high amounts of paperwork.” It is to be noted that this debate is now at the European level and the government, supervisors, and German banking industry unanimously hold a joint position. He concludes that “we must present a united German front. If we in Germany do not manage to all stand behind the small banking box concept, we will have a hard job convincing other European countries.

     

    Related Link: Speech

    Keywords: Europe, EU, Germany, Proportionality, Basel III, Small Banking Box, Bundesbank, BIS

    Featured Experts
    Related Articles
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    News

    FDIC Approves Proposal to Amend Swap Margin Rule

    FDIC approved what would be a joint proposal by the US Agencies (FCA, FDIC, FED, FHFA, and OCC) to amend regulations that require swap dealers and security-based swap dealers under the agencies’ respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared (Swap Margin Rule).

    September 17, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 848 and 470

    FASB proposed taxonomy improvements for the proposed Accounting Standards Update on topic 848 on facilitation of effects of reference rate reform on financial reporting.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Statement on Recalculating Transitional Measures Under Solvency II

    BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Paper on Embedded Supervision of Blockchain-Based Financial Market

    BIS published a working paper that investigates ways to regulate and supervise blockchain-based financial markets.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Paper on Market-Implied Systemic Risk and Shadow Capital Adequacy

    BoE published a working paper that presents a forward-looking approach to measure systemic solvency risk.

    September 13, 2019 WebPage Regulatory News
    News

    HKMA Consults on Policy Module on Pillar 2 Supervisory Review Process

    HKMA is consulting on the revised Supervisory Policy Manual module CA-G-5 that sets out the HKMA approach to conducting the supervisory review process under Pillar 2.

    September 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3830