Creating a Safer Financial System: Will the Volcker, Vickers, and Liikanen Structural Measures Help?

By José Vinãls, Ceyla Pazarbasioglu, Jay Surti, Aditya Narain, Michaela Erbenova, Julian T Chow

May 14, 2013

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José Vinãls, Ceyla Pazarbasioglu, Jay Surti, Aditya Narain, Michaela Erbenova, and Julian T Chow. Creating a Safer Financial System: Will the Volcker, Vickers, and Liikanen Structural Measures Help?, (USA: International Monetary Fund, 2013) accessed December 22, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

The U.S., the U.K., and more recently, the E.U., have proposed policy measures directly targeting complexity and business structures of banks. Unlike other, price-based reforms (e.g., Basel 3 and G-SIFI surcharges), these proposals have been developed unilaterally with material differences in scope, design and implementation schedules. This may exacerbate cross-border regulatory arbitrage and put a further burden on consolidated supervision and cross-border resolution. This paper provides an analysis of the potential implications of implementing different structural policy measures. It proposes a pragmatic and coordinated approach to development of these policies to reduce risk of regulatory arbitrage and minimize unintended consequences. In doing so, it also aims to identify a set of common policy measures that countries could adopt to re-scope bank business models and corporate structures.

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

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2013/004
Stock No:

SDNEA2013004
ISBN:

9781484340943
ISSN:

2617-6750

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