- Chapter 1: From Crisis to a New Financial Architecture: Taking Stock and Looking Forward
- Chapter 2: Shaping the New Financial System
- Chapter 3: Impact of Regulatory Reforms on Large and Complex Financial Institutions
- Chapter 4: The Perimeter of Financial Regulation
- Chapter 5: The Making of Good Supervision: Learning to Say “No”
- Chapter 6: Resolution of Cross-Border Banks: A Proposed Framework for Enhanced Coordination
- Chapter 7: The Too-Important-to-Fail Conundrum: Impossible to Ignore and Difficult to Resolve
- Chapter 8: Contingent Capital: Economic Rationale and Design Features
- Chapter 9: Recovery and Resolution Plans (Living Wills): A Solution to the TITF Problem?
- Chapter 10: Making Banks Safer: Can Volcker and Vickers Do It?1
- Chapter 11: Subsidiaries or Branches: Does One Size Fit All?
- Chapter 12: Redesigning the Contours of the Future Financial System
Back Matter
- Aditya Narain, Inci Ötker, and Ceyla Pazarbasioglu
- Published Date:
- April 2012

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Index
[Page numbers followed by f, n, or t refer to figures, footnotes, or tables, respectively.]
A
- Accountability
- of macroprudential authorities, 30
- subsidiarization rationale, 226
- of supervisors, 5, 20, 21, 93, 94
B
- Bail-in proposals, 151–153, 172
- Bank for International Settlements, 5, 24, 29, 30, 258
- Bank holding companies, 54, 201, 204, 205, 207, 209
- Bank Holding Companies Act, 205
- Basel Committee on Banking Supervision
- capital and liquidity requirements, 3, 18, 38, 43–52, 57, 161, 182–183
- countercyclical risk calculation, 29, 41–42
- Core Principles for Effective Banking Supervision, 87, 88–89
- Cross-Border Bank Resolution Group, 101, 110–112, 125–127, 191
- in future of regulatory reform, 258
- minimum common equity ratio, 144, 163–164
- phased implementation of capital and liquidity rules, 4, 18–20, 19t, 40, 41t, 46, 64t, 182
- point of nonviability proposal, 169–170
- regulatory reform proposals, 38–40
- on supervision of cross-border operations, 58, 234–235
- Bear Sterns, 72
C
- Capital and liquidity buffers
- composition, 19–20, 40, 43, 54, 63–64
- current reform efforts, 3
- effects of reform proposals on LCFIs, 43–52, 57
- effects of reform proposals on size of financial system, 254
- goals for financial system, 1, 16
- goals of new prudential regulation, 78
- intangible and qualified assets in, 19–20, 40, 63
- macroeconomic impact of reforms, 18
- market-maker obligations to improve, 81
- methodology for estimating impact of reforms, 61–64
- origins of global financial crisis, 14, 18
- phased implementation of Basel III requirements, 4, 18–20, 19t, 40, 41t, 46, 64t, 182
- reforms in response to global crisis, 18–20, 40–41, 163–164, 182–183
- risks for centralized LCFIs, 104–105
- safeguards to prevent systemic risk, 57–58
- for SIFIs, 8, 145–146, 154, 170, 171
- See also Contingent capital instruments
- Central banks
- access to discount withdrawal facility, 201
- access to emergency liquidity facilities of, 28, 120, 121, 146, 165, 172
- in development and use of macroprudential policies, 30
- regulator relationship, 93
- risk assessment activities, 82
- Central counterparties clearance, 27–28, 257
- Choice between branch and subsidiary structure
- business model considerations, 226–227, 229–230
- cost considerations, 225, 237, 242–244
- credit supply considerations, 232–233
- current geographical distribution, 227, 231–232t
- degrees of centralization, 222, 223–224
- determinants of, 222, 228–230, 238
- financial stability and, 223–227
- home/host country factors in, 227, 228–229
- liquidity management considerations, 226
- management structure and function, 224
- policymaker perspective, 232–237, 238
- resolution considerations, 236–237, 239
- risk management considerations, 226, 238–239
- sharing of affiliate losses, 225, 235
- stand-alone subsidiarization, 236, 241–242t
- supervision responsibility, 222, 233, 234–235
- trade-offs in, 221–222, 235–236
- vulnerability to shocks, 225, 233–235
- See also Cross-border operations; Subsidiarization
- Clearing and settlement activities, 27, 54, 77, 79, 81, 127, 226, 257
- Collateralized debt instruments, 80
- Collateral valuation, 27
- Competition
- distortions associated with SIFIs, 136
- expected reform outcomes, 11
- goals for financial system, 1, 17
- Volcker Rule effects, 209
- Concentration of banking system, 39f, 134n, 255–256
- Contingent capital instruments
- applications, 165, 173
- conversion rate, 166–167, 180–181t
- in crisis management framework, 8, 26, 173
- current interest in, 145, 161
- with debt write-off features, 166–167
- design, 173
- distinctive features, 163
- future prospects, 167–169, 173
- versus hybrid instruments, 163, 182–184
- as loss-absorbing buffer, 170–172
- modeling of, 163, 173–177
- monitoring, 173
- purpose, 162
- rationale, 8, 145, 161, 163–164
- recent implementations, 169–172
- tax and regulatory treatment, 167–168
- trigger conditions, 26, 164–166, 169–170, 173, 178–179t
- Contingent convertible bonds. See Contingent capital instruments
- Counterparty risk, 252, 254, 257
- Basel Committee proposals, 18, 40, 61, 140
- branch versus subsidiary model, 226
- concerns, 27
- oversight, 73, 76, 81
- requirements for ring-fenced banks, 211, 214
- Credit default swaps, 80, 252
- Credit rating agencies, 28, 204
- Cross-border operations
- centralization decisions, 222
- crisis prevention and preparedness, 109, 111
- future prospects, 254–255
- growth of, 103–104
- implementation of recovery and resolution plans, 192
- implications for utility banking proposals, 200
- international standards for supervision, 108
- need for international coordination on, 237
- origins of global financial crisis, 2, 38, 238
- proposal for subsidiary structure of SIFIs, 10, 56–57, 112, 143–144, 190–191
- as source of systemic risk for host jurisdiction, 105
- Spanish model, 239–240
- structure and organization, 104–105, 221–223
- supervisory function in, 96, 103, 233, 234–235
- See also Choice between branch and subsidiary structure; Resolution framework for cross-border banks
D
- Deferred tax assets, 63–64
- Deposit guarantee scheme, 120
- Derivatives markets
- clearing facilities, 257
- effects of reforms, 52, 54–55
- evolution of financial industry supervision, 74, 84
- scope of regulation, 81
- strategies for improving resilience of, 27–28
- systemic risk prevention, 141n
- Dodd-Frank Act, 54–55, 142, 150 See also Volcker Rule
E
- Economic growth
- effect of capital and liquidity requirement reforms, 18
- future prospects, 252–253
- goals of financial system reform, 3, 247
- risk taking and, 16, 248
- size of financial sector, 15f
F
- Federal Deposit Insurance Corporation, 114n
- Financial Sector Assessment Program, 20, 32, 87, 258–259
- Financial Stability Board, 1, 5, 13, 24, 27, 28, 29, 30, 58, 95, 111, 135, 161, 186, 207, 258
- Financial stability contributions, 22, 25–26
- Financial Stability Oversight Council, 207, 208t
- Financial system reforms, generally
- effects on markets, 256–257
- effects on size of financial system, 254
- effects on structure of banking system, 255–256
- future prospects, 12, 15–16, 32, 248–249, 251–257
- goals, 1, 2, 3, 11–12, 16–17, 31–32, 247
- macroprudential strategies for enhancing resilience, 24–30
- rationale, 59–60t
- response to global crisis, 2, 3f, 11, 13, 15–16, 35–36, 38–42, 247, 251
- role of International Monetary Fund, 258–259
- See also Implementation of reforms; Regulation
- Fixed income, commodities, and credit instruments, 54–55
- Fortis Group, 109, 110
G
- Glass-Steagall restrictions, 142, 204–205
- Global financial crisis
- bail-out rationale for TITFs, 194
- determinants of country outcomes, 83
- effects of hybrid capital instruments, 163
- lessons of, 75, 247
- origins of, 1–2, 13, 14–15, 27, 35, 37–38, 37f, 73–75, 86, 134, 161, 201–202, 218, 238, 247, 249–251
- reform efforts in response to, 2, 3f, 11, 13, 15–16, 35–36, 38–42, 72–73, 161
- regulatory approach preceding, 71–72
- supervision failures in, 86–87
- Global systemically important banks, 145, 170
- Group of Twenty, 1, 13, 22, 27, 30, 38, 71, 96, 101, 186
H
- Hedge funds
- assessment challenges, 207
- contingent capital instruments market and, 168, 182
- Glass-Steagall restrictions, 205
- rationale for regulation, 76, 203
- regulatory response to crises, 72, 73, 76
- Volcker Rule requirements, 26, 52, 54, 142, 204, 207
- Household borrowing, 249
- Household borrowing and saving, 254
I
- Implementation of reforms
- international framework for resolution, 23–24, 58, 102, 124–125
- key tasks, 3
- monitoring effects of, 31
- need for global consistency and coordination in, 11, 31, 32, 56, 58, 101
- phased-in capital and liquidity requirements, 4, 18–20, 19t, 40, 41t, 46
- policy implications of SIFI reform proposals, 216–217
- prevention of unintended consequences of regulatory reforms, 75
- private sector role in, 3, 13
- recovery and resolution plans, 9, 151, 188–189, 191
- role of international institutions, 13, 32, 33t, 258–259
- significance of, in reform effectiveness, 87
- systemic risk shifting in response to, 4, 8, 36, 56, 193, 195, 200, 216–217
- Independent Commission on Banking (United Kingdom), 144, 204, 209–215, 216
- Insurance, bank involvement in
- Basel capital requirements, 45, 53
- globalization trends, 103
- market value of, 156
- principles of supervision, 90
- reforms in response to global crisis, 72–73
- supervision before global crisis, 84
- Interest rates
- competitive advantages of SIFIs, 136, 136f
- macroprudential policies to reduce systemic risk, 30
- International Accounting Standards Board, 258
- International Association of Deposit Insurers, 258
- International Association of Insurance Supervisors, 82, 87, 90
- International Monetary Fund, 2, 5, 13, 17, 18, 24, 27, 28, 29, 30, 32, 33t, 58, 147, 255, 258–259
- International Organization of Securities Commissions, 80, 81, 82, 87, 89–90, 258
- International Swaps and Derivatives Association, 127
- Investment banks
- branch versus subsidiary structure, 226–227
- definition, 156
- effects of regulatory proposals, 52, 53f, 54–55
- proposed capital and liquidity requirements, 4, 44–45, 52
- Volcker Rule requirements, 203
L
- Large and complex financial institutions (LCFIs)
- asset composition leading up to crisis, 38
- definition, 35n
- effects of proposed capital requirements, 42–47, 61–64
- effects of proposed liquidity requirements, 42–43, 47–52, 48t
- effects of proposed regulations, 36–37, 56
- evolution of financial industry supervision, 85
- financial system reform needs, 2
- growth of, 103–104
- origins of global financial crisis, 2, 35, 37–38, 134, 251
- reform efforts in response to global crisis, 36
- risks for centralized organizations, 104–105
- structure and organization, 104
- See also Systemically important financial institutions (SIFIs)
- Lehman Brothers, 22, 27, 72, 109, 110
- Leveraging of financial system
- current reform requirements, 40
- filter rule test, 218–220
- goals of new prudential regulation, 78
- origins of global financial crisis, 14, 218, 250
- rationale for regulation, 75–76, 77
- Liquidity Coverage Ratio, 40
- Living wills. See Recovery and resolution plans
- Long-Term Capital Management, 73, 76
M
- Macroprudential policies
- financial system reform needs, 3, 30
- goals for financial system reform, 17
- monetary policy and, 30
- reform rationale, 59–60t
- reforms in response to global crisis, 2, 41–42
- research needs, 30, 31
- strategies for increasing systemic resilience, 24–29
- Market functioning
- branch versus subsidiary structure considerations, 227, 230, 233
- distortions associated with SIFIs, 136–137
- entry and exit, 1, 17
- future prospects, 256–257
- origins of global financial crisis, 72, 75
- strategies for enhancing resilience in, 27–29
- transparency, 29
- Microprudential policies
- goals for financial system reform, 17
- reform rationale, 59–60t
- reforms in response to global crisis, 2
- strategies for increasing institutional resilience, 17–24
- Mortgage servicing rights, 64
N
- Narrow funding banks, 193, 195, 201–202, 217
- Net stable funding ratio, 19, 40–41, 49
- methodology for assessing impact of, 65–66t
- Nonbank financial system
- future prospects, 253
- in global financial crisis, 15
- growth of, 16f, 250
- regulatory goals, 17, 19, 31, 253
- resolution, 6, 23, 103, 106, 150
O
- Off-balance-sheet activities
- accounting rules, 29, 149
- current status, 15
- regulatory reforms, 72
- supervision, 86, 91
- trends before global crisis, 35, 72, 84, 249
P
- Prevention and preparedness, 109, 111, 251
- Private equity investments
- bail-in debt to aid resolution of, 151–153
- regulatory goals, 76, 82
- Volcker Rule on, 26, 52, 54, 142, 204, 205
- Private sector
- debt-for-equity conversions for resolution, 22–23
- funding of resolution process, 120–122
- in implementation of reforms, 3, 13
- industry views on potential impacts of reforms proposals, 67–69t
- origins of global crisis, 2
- supervisor relationship with, 95
- Procyclicality
- contingent capital investments and, 8, 170, 173, 183–184
- current reform efforts, 41–42
- goal of reforms, 1, 2, 16, 24, 252
- origins of global financial crisis, 250
- research needs, 29
- Proprietary trading
- complementary regulations to ban on, 216, 217
- filter rule test, 218–220
- future prospects, 209, 254
- LCFI activities, 56n
- Volcker Rule on, 26, 52, 54, 142, 203, 204, 205, 207, 209
R
- Rabobank Senior Contingent Notes, 167
- Recovery and resolution plans, 22
- benefits, 188, 191
- in crisis management framework, 186
- cross-border implementation, 192
- data needs for, 187, 188–189
- definition, 185
- development of, 187–188
- effects on business strategy, 56–57
- goals for SIFIs, 186, 237n
- implementation challenges, 9, 151, 188–189
- interaction with other plans, 189–191
- policy implications, 191–192
- rationale, 9, 151, 185–186
- recent implementations, 191
- recovery component, 186–187
- resolution component, 187
- structure, 151
- subsidiarization and, 237
- Reducing size of SIFIs
- challenges to, 10, 143
- potential negative consequences of, 10, 22
- rationale, 9, 142, 194
- recent initiatives, 142–143
- separation of financial and nonfinancial activities, 79–80, 142–143
- strategies for, 9, 22
- structural constraints to, 26–27
- utility banking proposals, 196–201
- Regulation
- branch versus subsidiary structure considerations, 227, 228, 233–235
- of companies with financial and nonfinancial activities, 79–80
- conduct-of-business, 77
- of credit rating agencies, 28
- current compliance with good practices, 20, 21f
- design of new prudential regulation, 77–80
- effects of proposals on LCFIs, 36–37
- financial system reform needs, 2, 3, 31
- future prospects, 32, 248, 251–257
- goals for financial system reform, 17, 73, 75–77
- implications for bank business strategies, 52–56
- industry views on potential impacts of proposals, 67–69t
- lessons from global crisis, 4, 75
- of nonbank institutions, 253
- organization and governance of, 80
- origins of global financial crisis, 2, 4, 13, 14, 15, 37–38, 72, 73–75, 86, 247, 250–251
- prevention of unintended consequences of, 57–58, 72, 75
- procyclicality risk, 16, 24, 41–42, 147
- of products, 80–81
- rationale for limiting, 71–72, 75
- rationale for wider perimeter of, 4, 17, 58, 71, 75
- recommendations for expanded perimeter, 73, 75, 82
- reform challenges, 4–5
- reforms in response to global crisis, 2, 3f, 11, 13, 15–16, 35–36, 38–42, 72–73, 248, 251
- research needs, 31
- scope of financial institutions subject to, 77, 78–79
- supervision and, 5, 93
- systemic risk assessment to determine boundaries of, 25, 82
- systemic risk shifting in response to, 4, 8, 36, 56, 193, 195, 200, 216–217, 253
- Remuneration practices, 74
- Repo markets, 27
- Resolution framework for cross-border banks
- authority for, 116–117, 125
- basic elements, 114–115
- challenges to development, 6, 9
- communication and information management in, 124
- coordination standards for, 115, 116–119, 255
- corporate solvency model, 112–114
- costs of current approach, 108–109
- creditor safeguards in, 117, 118
- Cross-Border Bank Resolution Group initiatives, 110–112, 125–127
- current status, 150, 255
- deposit guarantee scheme, 120
- funding of resolution process, 115, 120–122
- harmonization of national law for, 116–118
- implementation issues, 23–24, 58, 102, 124–125
- leadership for implementation, 122–123
- modification of national law for, 114, 115–116
- national frameworks, 105–107
- need for, 6, 17, 58, 101–102, 103–104, 124, 153, 237, 239
- nonbank institutions and, 103, 106, 123
- objectives, 101–102, 251
- obstacles to, 150
- proposed structure, 6, 23
- risk mitigation mechanisms, 126–127
- scope of activities in, 102
- strategies for, 22
- supervision frameworks and, 103, 107, 108, 118–119
- territoriality approach to insolvencies, 107
- transfer of contractual relationships, 127
- treaty approach, 102, 111–112
- United Nations Model Law, 113, 127–131
- universality approach to insolvencies, 107, 111–112, 114
- See also Cross-border operations
- Resolution of failed institutions
- bail-in power to aid in, 151–153, 172
- cross-border banks. See Resolution framework for cross-border banks
- current status of plans for, 6
- debt-to-equity conversions for, 22–23, 151
- funding for cost of, 22
- goals for financial system, 1, 3, 16, 17
- lesson from global crisis, 22
- levy on SIFIs to reduce effects of, 22, 25–26
- origins of global financial crisis, 251
- proposed framework, 23–24
- reform challenges, 6, 23
- SIFIs, 6–7, 8, 149–151
- significance of, in reform effort, 6, 22
- strategies for, 22
- use of contingent capital instruments, 165, 166
- See also Recovery and resolution plans
- Ring-fencing
- capital costs, 242–244
- cross-border resolution and, 23, 105, 106, 130
- motivation, 107, 115, 195, 210
- policy implications, 195
- protection from contagion, 211–212
- recent policy formulations, 142–143, 193, 195, 209–210
- requirements under, 195, 210–211, 213–214
- retail operations, 214–215
- See also Subsidiarization
- Risk management
- benefits of utility banking, 197–198
- counterparty clearance, 257
- current trends in global financial system, 252–253
- economic growth and, 16, 248
- goals of regulation, 75–77
- goals of Volcker Rule, 203
- growth of cross-border operations, 104
- incentives, 73, 79, 248
- levies and surcharges to improve, 25–26, 144–145, 146–147
- liquidity risk assessment, 146, 146n
- models of bailout and, 173–177
- origins of global financial crisis, 2, 13, 14, 35, 37–38, 72, 73–75, 250–251
- prevention of unintended consequences of reforms, 57–58, 72, 75, 216–217
- procyclicality effects, 29
- rationale for contingent capital instruments, 163, 164–166
- rationale for limiting prudential regulation, 71–72
- recommendations for capital and liquidity requirements, 18
- remuneration practices and, 74
- securitization and, 28–29
- shielding ring-fenced banks from contagion, 211–212, 213–214
- in SIFIs, 8, 194
- strategies to reduce systemic risk, 25–27, 35–36
- supervision failures in global financial crisis, 86–87
- systemic risk assessment, 24–25, 73, 82
- TITF problem, 133–134
- in traditional banking, 193–194
- transparency and disclosure for, 5
- See also Reducing size of SIFIs; Regulation; Supervision
S
- Securities market
- origins of global financial crisis, 74–75
- reforms in response to global crisis, 72–73
- scope of regulation, 81
- Volcker rule effects on competition in, 209
- Securitization
- effects of reforms, 52
- evolution of financial industry supervision, 84
- future of regulation, 29, 253
- origins of global financial crisis, 28, 74, 75
- reforms in response to global crisis, 28–29
- Shadow banking
- assets, 71
- definition, 56n
- financial sector interconnectedness, 38
- growth, 16f
- liabilities preceding crisis, 39f
- origins of global financial crisis, 15, 38, 39f
- systemic risk shifting in response to regulation, 4, 8, 36, 56, 193, 195, 200, 216–217, 257
- Special Investment Vehicles, 76, 77
- Stand-alone subsidiarization, 236, 241–242t
- Subsidiarization
- allowable activities, 210–211
- assessment challenges, 213–214
- costs, 144, 190–191, 242–244
- home/host country policy decisions, 232–237
- implementation in United Kingdom, 209–215
- management structure, 212
- objective, 210
- organization of retail banking, 214–215
- protection from contagion, 211–212
- prudential capital constraints, 212, 212t
- rationale, 10, 56–57, 112, 143–144, 195, 210
- restrictions on intragroup transactions, 212, 213–214
- systemic risk for host jurisdiction in, 105
- See also Choice between branch and subsidiary structure; Ring-fencing
- Supervision
- accountability for, 21, 93, 94
- agency mandates for, 20, 21
- characteristics of financial industry oversight, 84
- colleges, 111, 119n, 255
- compliance-based, 84
- of cross-border operations, 96, 222, 233, 234–235
- current compliance with good practices, 20, 21f, 87–90
- as determinant of financial crisis outcomes, 83
- development of recovery and resolution plans, 188
- enforcement-based, 84
- evolution of, in financial industry, 84–85
- financial system reform needs, 2, 3, 17
- framework for enhancing, 20, 21
- future prospects, 252
- goals for new prudential regulation, 78
- international cooperation in resolution and, 103, 107, 108, 118–119
- international standards, 98–100t, 108, 118–119, 255
- legal authority, 92
- lessons from global crisis, 85
- objectives, 94
- operational independence for, 94
- organization and processes, 93
- origins of global financial crisis, 2, 13, 86–87, 247, 250–251
- professional status, 96
- recommendations for, 95–96
- reforms in response to global crisis, 72–73
- regulation and, 5, 93
- relationships with other agencies, 93
- relationship with industry, 95
- requirements for effectiveness, 5, 20, 85, 90–95, 97
- resources for, 21, 92, 94, 96
- ring-fenced banks, 213–214
- risk assessment capacity for, 21
- risk-based, 84
- scope of activities in, 83
- of SIFIs, 5, 8, 147–148
- significance of, in reform effort, 5, 20, 83
- strategy for, 21, 93
- Volcker Rule implementation challenges, 207
- Swap Push-out Rule, 143
- Systemically important financial institutions (SIFIs)
- bail-in power to aid resolution of, 151–153, 172
- bail-out decisions, 139, 140, 194
- benefits of, 135–136, 221
- capital and liquidity buffer requirements, 145–146, 154, 170, 171
- competitive advantage, 136–137
- cross-border activity, 138
- current risk mitigation efforts, 2, 41–42, 42t 140
- data template for, 5
- definition, 73, 75–76, 133n
- design of new prudential regulation, 78–80
- economies of scale/scope, 155
- financial stability contributions, 22, 25–26
- frequency of distress, 138–139, 138f
- future prospects, 135, 154
- interconnectedness, 134, 137f, 138
- interest rates charged to, 136, 136f
- market value, 155–156
- origins of global financial crisis, 134, 194
- outcomes of global financial crisis, 134
- policy implications of reform proposals, 216–217
- political influence, 137
- recent growth, 137, 137f, 139–140
- recovery and resolution plans, 151, 186
- reform challenges, 6–8, 143
- reform goals, 11–12, 73, 135, 140
- resolution strategies, 22, 149–151
- risk assessment, 24–25, 73
- risk-based levies and surcharges, 25–26, 144–145, 146–147
- risk-based prudential requirements, 25
- risk of unintended consequences in
- rescoping of, 195–209, 216–217
- risks associated with, 194, 221
- size characteristics, 137–138, 157–159
- strategies for risk reduction, 8, 25–27, 135, 140, 141–142, 141f, 194–195, 221
- subsidiarization proposals, 10, 56–57, 105, 112, 143–144, 190–191
- supervision needs, 5, 147–148
- transparency of operations, 8, 148–149
- See also Recovery and resolution plans; Reducing size of SIFIs; Too-important-to-fail institutions
T
- Taxation
- branch versus subsidiary structure considerations, 227, 228–229
- of multinational groups, 104
- to reduce institutional risk taking, 26
- risk-related levies and surcharges, 144–147
- treatment of contingent capital instruments, 167
- Too-important-to-fail institutions
- bail-out rationale, in global crisis, 194
- capital and liquidity buffer requirements, 154
- contingent capital strategies for, 162–164
- financial system reform needs, 2
- nature of risk associated with, 133–134, 153, 221
- origins of global financial crisis, 2, 15, 134
- outcomes of global financial crisis, 134
- strategies to reduce risk from, 153–154, 221
- See also Recovery and resolution plans; Reducing size of SIFIs; Systemically important financial institutions (SIFIs)
- Traditional commercial banks
- efficient size, 155
- growth, 16f
- liabilities preceding crisis, 39f
- ownership concentration, 39f
- proposed capital and liquidity rules, 4, 52
- Volcker Rule requirements, 203
- Transparency
- to assess systemic risk, 73
- expected reform outcomes, 11
- financial system reform needs, 2, 5
- future prospects, 256–257
- goals for financial system, 1, 16, 17
- origins of global financial crisis, 14, 37–38
- in SIFIs, 8, 148–149
- significance of, in reform effort, 5
- strategies for enhancing market stability, 29
U
- United Nations Commission on International Trade Law, 112–114, 116n, 127–131
- Universal banks
- branch versus subsidiary structure, 222, 226–227
- current capital structure, 43
- definition, 103n, 156
- growth of, 103–104, 194
- proposed capital requirements, 44–45, 46, 53
- ring-fencing, 209–210, 211, 213
- SIFI banks, 138, 139, 140
- transformation into utility banks, 196f, 200–201, 216
- Volcker Rule and, 52, 54
- vulnerability to shocks, 194
- Utility banking
- adjustment costs, 200–201
- definition, 196
- impact analysis, 199t
- implementation challenges, 200
- policy implications of SIFI reform proposals, 216–217
- rationale, 196
- risk reduction benefits, 197–198
- scope of proposals for, 196–197, 197f social costs, 198–199
- transformation of universal banking into, 196f, 201, 216f
V
- Volcker Rule
- challenges to implementation, 195
- effects on competitiveness in securities markets, 54, 209
- essential requirements, 26, 52, 56, 195, 204–205, 205f, 206t implementation, 204
- implementation challenges, 193, 205–209
- Independent Commission on Banking ring-fencing rules and, 214, 215t, 216
- rationale, 142–143, 203–204
- risk of unintended consequences, 193, 195, 209