- Identifies four main risks:
- contagion between public finances, the financial sector and economic growth;
- funding strains in euro-area banks;
- weakening macroeconomic activity and credit risks for banks;
- imbalances between key global economies.
- Related to financial regulation, the review argues against maximum harmonisation of capital requirements, suggesting that for stability reasons, EU member states should be able to apply more stringent rules than the harmonised minima.
- BCBS: Definition of capital disclosure requirements – consultative doc
- Disclosure requirements that aim to improve the transparency and comparability of a bank's capital base.
- BCBS – The Joint Forum: Principles for the supervision of financial conglomerates – consultative doc
- The Joint Forum's aim is to focus on closing regulatory gaps, eliminating supervisory ‘blind spots,’ and ensuring effective supervision of risks arising from unregulated financial activities and entities.
- Principles:
- Supervisory powers and authority – The legal framework should grant the necessary power and authority to supervisors to enable cooperation, coordination and information exchange among supervisors in order to facilitate effective group-wide supervision.
- Supervisory responsibility - Supervisors should establish, implement and maintain a comprehensive framework of risk-based minimum prudential standards for financial conglomerates.
- Corporate governance – must have transparent organisational and managerial structure, which is consistent with its overall strategy and risk profile and is well understood by the board and senior management of the head company.
- Capital adequacy and liquidity – must maintains adequate capital and liquidity on a group-wide basis to act as a buffer against the risks associated with the group’s activities, particularly in times of stress.
- Risk Management -
independent, comprehensive and effective risk management framework, which
includes a robust system of internal controls.
- EIOPA: Report on Financial Literacy and Education Initiatives by Competent Authorities
- Most EIOPA Members neither have a national strategy on financial education nor have one under preparation.
- Given the renewed
emphasis on consumer protection after the financial crisis, information about
the state of financial literacy and efforts to improve financial education will
be crucial for developing consumer-oriented regulatory regimes.
- Reuters: SEC regulator sceptical on MMF reform
- Daniel Gallagher (Republican SEC official): ‘We cannot know what risks money market funds pose unless ... we have a clearer understanding of the effects of the commission's 2010 money market reforms… Any rulemaking in this space could be premature and possibly unnecessary.’
- ‘The level of capital
that would be required to legitimately backstop the funds would effectively end
the industry… And I have doubts that a smaller cap that accrues over time would
be sufficient to protect investors in funds in an actual crisis.’
- HM Treasury: Response to Vickers report
- Ring-fence to be introduced, with large ring-fenced banks to hold at least 10% equity capital.
- UK operations of British banks, and the non-UK operations of UK-headquartered banks which pose a threat to UK taxpayers, must hold at least 17% loss absorbing capital.
- Depositor preference will be introduced, after consultation.
- FCA will have mandate to promote competition in the interests of consumers.
- Legislation for the ring-fence will be separated and brought forward to be completed in 2015, and banks to comply ‘as soon as practically possible thereafter.’
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