Hostname: page-component-76fb5796d-vfjqv Total loading time: 0 Render date: 2024-04-29T09:48:39.752Z Has data issue: false hasContentIssue false
  • English
  • Français

New Regulation and the New World of Global Banking

Published online by Cambridge University Press:  26 March 2020

Stephen G. Cecchetti ,
Dietrich Domanski  and
Goetz von Peter
Stephen G. Cecchetti
Affiliation:
∗Bank for International Settlements (BIS), National Bureau of Economic Research, and Centre for Economic Policy Research
Dietrich Domanski
Affiliation:
BIS
Goetz von Peter*
Affiliation:
BIS
*
e-mail Goetz.VonPeter@bis.org
Get access Rights & Permissions [Opens in a new window]

Abstract

Global banks are changing. With a new set of rules come new business models. We review the international dimension of the financial crisis, centring on cross-border losses and cross-currency funding problems that prompted authorities to adopt wide-ranging rescue measures and liquidity operations. Against this background, we proceed to examine the regulatory response, focusing on the Basel III framework and the ongoing work of the Basel Committee and Financial Stability Board regarding the amount of capital banks are required to hold, restrictions on maturity transformation on banks' balance sheets and proposals to mitigate the risks posed by systemically important financial institutions. Our conclusion is that capital and liquidity regulation will have distinctly different effects on the international organisation of banks. Liquidity regulation, especially when applied locally, has the greatest potential to reshape the global banking landscape.

Keywords

Global banksfinancial crisismultinational bankinglocal operationsregulatory reformBasel IIIcapital regulationliquidity regulationF36G01G21G28H12
Type
Research Articles
Information
National Institute Economic Review , Volume 216 , April 2011 , pp. R29 - R40
Copyright
Copyright © 2011 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

∗

We have benefitted from discussions with a large number of our colleagues, including William Coen, Robert McCauley and Patrick McGuire. Jhuvesh Sobrun provided competent assistance with the figures. The views expressed in this paper are those of the authors and not necessarily those of the BIS.

References

Baba, N., McCauley, R. and Ramaswamy, S. (2009), ‘US dollar money market funds and non-US banks’, BIS Quarterly Review, March.Google Scholar
Bank for International Settlements (BIS) (2009), BIS Annual Report 2008/09, 29 June.Google Scholar
Basel Committee on Banking Supervision (BCBS) (2008), ‘Liquidity risk: management and supervisory challenges’.Google Scholar
Basel Committee on Banking Supervision (BCBS) (2009), ‘International framework for liquidity risk measurement, standards and monitoring - consultative document’, December.Google Scholar
Basel Committee on Banking Supervision (BCBS) (2010a), ‘Report and recommendations of the Cross-border Bank Resolution Group - final paper’, March.Google Scholar
Basel Committee on Banking Supervision (BCBS) (2010b), ‘Basel III: a global regulatory framework for more resilient banks and banking systems’, December.Google Scholar
Basel Committee on Banking Supervision (BCBS) (2010c), ‘An assessment of the long-term economic impact of stronger capital and liquidity requirements’, August 2010.Google Scholar
Bertaut, C. and Pounder, L. (2009), ‘The financial crisis and US cross-border financial flows’, Federal Reserve Bulletin, 95.Google Scholar
Brierley, P. (2009), ‘The UK Special Resolution Regime for failing banks in an international context’, Financial Stability Paper, No. 5, July.CrossRefGoogle Scholar
Brunnermeier, M. (2009), ‘Deciphering the liquidity and credit crunch 2007-2008’, Journal of Economic Perspectives, 23(1), Winter.CrossRefGoogle Scholar
Caruana, J. (2010), ‘Macroprudential policy: could it have been different this time?’, speech at the People's Bank of China, seminar on macroprudential policy, in cooperation with the International Monetary Fund, Shanghai, 18 October.Google Scholar
Committee on the Global Financial System (CGFS) (2009), ‘The role of valuation and leverage in procyclicality’, CGFS Papers, No. 34, April.Google Scholar
Committee on the Global Financial System (CGFS) (2010a), ‘The functioning and resilience of cross-border funding markets’, CGFS Papers, No. 37, March.Google Scholar
Committee on the Global Financial System (CGFS) (2010b), ‘Funding patterns and liquidity management of internationally active banks’, CGFS Papers, No. 39, May.Google Scholar
Committee on the Global Financial System (CGFS) (2010c), ‘Long-term issues in international banking’, CGFS Papers, No. 41, July.Google Scholar
Fender, I. and McGuire, P. (2010a), ‘European banks’ US dollar funding pressures’, BIS Quarterly Review, June.Google Scholar
Fender, I. and McGuire, P. (2010b), ‘Bank structure, funding risk and the transmission of shocks across countries: concepts and measurement’, BIS Quarterly Review, September.Google Scholar
Financial Services Authority (FSA) (2009), ‘Strengthening liquidity standards’, Policy Statement 09/16, October.Google Scholar
Financial Stability Board (FSB) (2010), FSB Report on reducing the moral hazard posed by systemically important financial institutions: FSB Recommendations and Time Lines, 20 October.Google Scholar
Goodhart, C. and Schoenmaker, D. (2009), ‘Fiscal burden sharing in cross-border banking crises’, International Journal of Central Banking, March.Google Scholar
Gorton, G. (2009), ‘Information, liquidity, and the (ongoing) panic of 2007’, American Economic Review: Papers & Proceedings 2009, 99, 2, pp. 567–72.CrossRefGoogle Scholar
Gorton, G. and Metrick, A. (2011), ‘Securitized banking and the run on repo’, Journal of Financial Economics (forthcoming).CrossRefGoogle Scholar
Hördahl, P. and King, M. (2008), ‘Developments in repo markets during the financial turmoil’, BIS Quarterly Review, December.Google Scholar
King, M. (2009), ‘Time to buy or just buying time? The market reaction to bank rescue packages’, BIS Working Papers, No. 288, September.CrossRefGoogle Scholar
Macroeconomic Assessment Group (MAG) (2010), ‘Assessing the macroeconomic impact of the transition to stronger capital and liquidity requirements - final report’, December.Google Scholar
McCauley, R., McGuire, P. and von Peter, G. (2010), ‘The architecture of global banking: from international to multinational?’, BIS Quarterly Review, March.Google Scholar
McGuire, P. and von Peter, G. (2009), ‘The US dollar shortage in global banking and the international policy response’, BIS Working Papers, No. 291.Google Scholar
Michaud, F.-L. and Upper, C. (2008), ‘What drives interbank rates? Evidence from the Libor panel’, BIS Quarterly Review, March.Google Scholar
Panetta, F.et al. (2009), ‘An assessment of financial sector rescue programmes’, BIS Papers, No. 48, July.Google Scholar