Reconsidering Bank Capital Regulation : A New Combination of Rules, Regulators, and Market Discipline

Author/Editor:

Connel Fullenkamp ; Celine Rochon

Publication Date:

September 15, 2014

Electronic Access:

Download PDF. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Despite revisions to bank capital standards, fundamental shortcomings remain: the rules for setting capital requirements need to be simpler, and resolution should be an essential part of the capital requirement framework.We propose a new system of capital regulation that addresses these needs by making changes to all three pillars of bank regulation: only common equity should be recognized as capital for regulatory purposes, and risk weighting of assets should be abandoned; capital requirements should be assigned on an institution-by-institution basis according to a regulatory (s,S) approach developed in the paper; a standard for prompt, corrective action is incorporated into the (s,S) approach.

Series:

Working Paper No. 14/169

Subject:

English

Publication Date:

September 15, 2014

ISBN/ISSN:

9781498382472/1018-5941

Stock No:

WPIEA2014169

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

36

Please address any questions about this title to publications@imf.org