- Principles 1-13 address supervisory powers, responsibilities and functions, focusing on effective risk-based supervision, and the need for early intervention and timely supervisory actions.
- Principles 14 to 29 cover supervisory expectations of banks, emphasising the importance of good corporate governance and risk management, as well as compliance with supervisory standards.
- Key improvements emerging from trends observed in the financial crisis:
- greater intensity and resources to deal effectively with systemically important banks;
- importance of applying a system-wide, macro perspective to the microprudential supervision of banks to assist in identifying, analysing and taking pre-emptive action to address systemic risk;
- increasing focus on effective crisis management, recovery and resolution measures in reducing both the probability and impact of a bank failure.
- BoE: Instruments of macroprudential policy – discussion paper
- Three categories of instruments under consideration, those that:
- affect the balance sheets of financial institutions;
- affect the terms and conditions of financial transactions;
- influence market structures.
- Balance sheet tools include:
- maximum leverage ratios, countercyclical capital and liquidity buffers, time-varying provisioning practices, and distribution restrictions.
- Sectoral capital requirements or ‘variable risk weights’ could have a role in targeting emerging risks in particular exposure classes.
- Tools that influence the terms and conditions of loans and other financial transactions include:
- ability to restrict the quantity of lending at high loan to value, or high loan to income ratios,
- power to impose and vary minimum margining requirements or haircuts on secured financing and derivative transactions.
- Market structure tools include:
- obligations to conduct financial trading on organised trading platforms and/or to clear trades through central counterparties.
- Targeted disclosure requirements could be used to enhance resilience by limiting uncertainty about specific exposures or interconnections.
- Adjusting risk weights on
intra-financial system activities could also play a role in limiting excessive
exposures building up between financial institutions.
- EBA: Draft ITS on supervisory reporting requirements – consultation paper
- Aims at implementing uniform reporting requirements which are necessary to ensure fair conditions of competition between comparable groups of credit institutions and investment firms.
- Reporting requirements developed taking into account the nature, scale and complexity of institutions' activities.
- Proportionality integral part of ITS with
certain reporting requirements being applicable only to institutions using
complex approaches to measure own funds requirements or to institutions that
have significant risk exposures.
- FT: Tobin tax costs ‘would fall on investors’
- Ultra-conservative money market funds would be hardest hit by an FTT.
- Might also accelerate the ongoing shift from active to passive investment.
- Securities trading could increasingly
switch from the cash to the derivatives market.
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