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Financial Institutions, Markets and
Regulation: A Survey
by T. Beck, E. Carletti and I. Goldstein
Discussion by A. De Vinc...
2
Global Banking Regulatory Radar
EMEA
20152016201720182019 2016 2017 2018 2019
CRD IV/ CRR
CCAR /DFAST
CRDIVB3 (IRB)
Base...
3
Beck, Carletti & Goldstein Survey (I)
 Is there a way to rationalize regulatory reforms undertaken
so far?
 Consider t...
4
Beck, Carletti & Goldstein Survey (II)
 The objective of the regulatory reforms is to influence PC,
EAC and LGC, with a...
5
Beck, Carletti & Goldstein Survey (III)
 Many reforms have been agreed, but only partly
implemented (some measures stil...
6
Beck, Carletti & Goldstein Survey (IV)
“The overhaul of the regulatory frameworks across the globe was
not only the resu...
Financial Institutions, Markets and
Regulation: A Survey
by T. Beck, E. Carletti and I. Goldstein
Discussion by A. De Vinc...
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Financial Institutions, Markets and Regulation: A Survey | COEURE Workshop on Financial Markets

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COEURE Workshop on Financial Markets

By: T. Beck, E. Carletti and I. Goldstein
Discussion by: A. De Vincenzo, Banca d’Italia

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Financial Institutions, Markets and Regulation: A Survey | COEURE Workshop on Financial Markets

  1. 1. Financial Institutions, Markets and Regulation: A Survey by T. Beck, E. Carletti and I. Goldstein Discussion by A. De Vincenzo, Banca d’Italia EUI, 6 June 2015
  2. 2. 2 Global Banking Regulatory Radar EMEA 20152016201720182019 2016 2017 2018 2019 CRD IV/ CRR CCAR /DFAST CRDIVB3 (IRB) Basel 2 Global systemic risk report UK FDSF FBO ST Review of trading book COREP/FINREP LCR1 LCR LCR1 LCR1 PRA / IMF ST BoE/PRA ST Adv. Approach Rule Capital PlanningLCR SA-CCR3 CCAR /DFA ST G-SIB Surcharge2 Leverage Ratio Leverage Ratio Leverage Ratio Review of trading book Vickers Reform Supplementary leverage ratio Review of trading book B3 ratios Basel 3 buffers LCR1 G-SIB Surcharge2 G-SIB Surcharge2 Capital rules to large foreign banks PRA Int’l banks CCAR / DFAST SA-CCR3 SA-CCR3 Reporting fin. conglomerates CA res. mortgage D-SIB framework4 LCR FSB Data Gap Initiative5 FSB Data Gap Initiative5 BoE/PRA ST BoE/PRA ST FSB Data Gap Initiative5 FSB Data Gap Initiative5 FSB Data Gap Initiative5 FSB Data Gap Initiative5 BoE/PRA ST BCBS 239 BCBS 239 BCBS 239 LCR1 CCAR / DFAST CCAR / DFAST LCR1 Concentration Large Exposures Concentration & Large Exposures Concentration Large Exposures IFRS 9 IFRS 9 IFRS 9Financial conglomerates Liquidity ST BHC and FBOST TLAC2 TLAC2 TLAC2 LCR1 NSFR NSFR NSFR New securitization framework New securitization framework New securitization framework G-SIB Surcharge2 Source: Moody’s Analytics. Analysis as of January 2015.
  3. 3. 3 Beck, Carletti & Goldstein Survey (I)  Is there a way to rationalize regulatory reforms undertaken so far?  Consider the following PC x EAC x LGC = ELC, where:  PC is the probability of a financial crisis;  EAC is the exposure of the financial system to a crisis;  LGC is the loss given crisis; and  ELC is the expected loss of a financial crisis.
  4. 4. 4 Beck, Carletti & Goldstein Survey (II)  The objective of the regulatory reforms is to influence PC, EAC and LGC, with a view to minimise ELC  Then:  New capital, liquidity, leverage rules tend to decrease PC  New G/D-SIB buffers, leverage, structural (activity restrictions), market infrastructures measures tend to limit EAC  New resolution mechanisms, TBTF, TLAC tend to reduce LGC  Regulatory and institutional reforms: the Banking Union
  5. 5. 5 Beck, Carletti & Goldstein Survey (III)  Many reforms have been agreed, but only partly implemented (some measures still need “calibration”); others are in the pipeline (for instance, IRRBB)  Some fundamental contributions from economic and financial research are (still) needed:  Steady state vs Transition to new equilibrium (starting points matter!)  Macroprudential tools, early-warning models and (still diverse) economic/financial cycles  Institutions vs Markets (i.e., shadow banking and securitization): US vs Europe
  6. 6. 6 Beck, Carletti & Goldstein Survey (IV) “The overhaul of the regulatory frameworks across the globe was not only the result of lessons learned from the recent crises but was also accompanied by extensive academic work. We have become better at measuring risk and designing regulatory tools to reduce build-up of systemic risk and manage it more effectively”  Partly agree… “[…] this leaves us with the unknown unknowns, including financial innovation leading to new business models and new structures in the financial system and thus new and future sources of financial fragility. As the financial system develops, research and analysis has to adapt to the dynamic nature of the financial system”  Fully agree!!!
  7. 7. Financial Institutions, Markets and Regulation: A Survey by T. Beck, E. Carletti and I. Goldstein Discussion by A. De Vincenzo, Banca d’Italia EUI, 6 June 2015

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