Creating a Safer Financial System: Will the Volcker, Vickers, and Liikanen Structural Measures Help?
Staff Discussion Notes, May 14, 2013
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Bibliographic details
- Authors: José Vinãls, Ceyla Pazarbasioglu, Jay Surti, Aditya Narain, Michaela Erbenova, Julian T Chow
- Published: May 14, 2013
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781484340943.006
Summary
- The U.S., the U.K., and the E.U. have proposed policy measures directly targeting complexity and business structures of banks.
- These structural proposals differ from price-based reforms (e.g., Basel 3 and G-SIFI surcharges).
- The proposals have been developed unilaterally with material differences in scope, design and implementation schedules.
- Unilateral differences may exacerbate cross-border regulatory arbitrage and increase burdens on consolidated supervision and cross-border resolution.
- The paper analyzes potential implications of implementing different structural policy measures and proposes a pragmatic and coordinated approach to reduce regulatory arbitrage and minimize unintended consequences.
- The paper aims to identify a set of common policy measures that countries could adopt to re-scope bank business models and corporate structures.
Major findings and implications
- Structural measures target bank complexity and business structures rather than price-based capital and surcharge instruments.
- Material differences in scope, design, and implementation schedules across jurisdictions create risks of:
- Cross-border regulatory arbitrage.
- Increased burden on consolidated supervision.
- Greater challenges for cross-border resolution.
- A coordinated approach is needed to mitigate these risks and minimize unintended consequences when implementing structural reforms.
Policy recommendations and proposed approach
- Propose a pragmatic and coordinated approach to development of structural policies.
- Identify a set of common policy measures that countries could adopt to:
- Re-scope bank business models.
- Re-scope corporate structures.
- Aim to reduce risk of regulatory arbitrage and minimize unintended consequences through coordination.
Publication and metadata
- Authors: José Vinãls, Ceyla Pazarbasioglu, Jay Surti, Aditya Narain, Michaela Erbenova, Julian T Chow
- Date: May 14, 2013
- Series: Staff Discussion Notes No. 2013/004
- Issue: 004
- Volume: 2013
- Pages: 27
- DOI: https://doi.org/10.5089/9781484340943.006
- ISBN: 9781484340943
- ISSN: 2617-6750
- Subject: Bank resolution; Banking; Financial crises; Financial regulation and supervision; Financial sector policy and analysis; Macrostructural analysis; Market risk; Structural reforms; Systemic risk
- Keywords: Bank business models; bank resolution; Bank resolution; capital; EU bank; financial system; Global; groupwide bank risk management; least cost resolution; loss experience; market risk; resolvability assessment; risk reduction; SDN; structural measures; Structural reforms; Systemic risk
Staff Discussion Note authored by José Vinãls et al., "Creating a Safer Financial System: Will the Volcker, Vickers, and Liikanen Structural Measures Help?", Staff Discussion Notes 2013, 004 (2013).