Regulatory Reform Scorecard - PowerPoint Presentation

 Regulatory Reform Scorecard
 Regulatory Reform Scorecard

Regulatory Reform Scorecard - Description


Cecchetti amp Schoenholtz Topic Status Recommendation Capital Up 2x since crisis requirements up 10x Raise much further Liquidity 2 new rules LCR amp NSFR Simplify to one ID: 776274 Download Presentation

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regulatory lcr amp personal regulatory lcr amp personal 2017 views expressed november reform scorecard requirements safety considerationsinternational efficiencywatch perimeterherding

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Presentation on theme: " Regulatory Reform Scorecard "— Presentation transcript


Slide1

Regulatory Reform Scorecard - Cecchetti & Schoenholtz

TopicStatusRecommendationCapitalUp 2x since crisis(requirements up 10x)Raise (much?) furtherLiquidity2 new rules: LCR & NSFRSimplify to oneResolutionSubstantial ProgressNeeds improvementSkeptical, expect severe damageCentral ClearingSubstantial ProgressNeed resolution planSystemic RegulationLike Stress testsMacro-Pru still early daysStress tests are usefulMuch more work neededOverallClearly safer, More resilient, But. . . All of the above, plus:Tradeoff – safety v efficiencyWatch regulatory perimeterHerding considerationsInternational fragmentation worry

3 November 2017

Views expressed are personal only

Slide2

Regulatory Reform Scorecard

TopicStatusRecommendationCapitalUp 2x since crisisTwo requirementsRaise (much?) further

3 November 2017

Views expressed are personal only

Crisis drawdown review (FSB data)

Major

impact

from resolution regime

Best Tier 1/RWA range goes from 16-19% to 10-14%

(BoE, 2015

)

Incentive issues:

Role of

requirements

vs actual level – “distance to constraint”

High capital supports lending, but high

requirements

do not

Distorted incentives – harder to control regulatory

perimeter

Leverage ratio creates bad incentives

CCAR - mostly a capital requirement (often the binding constraint)

Slide3

Regulatory Reform Scorecard

TopicStatusRecommendationLiquidity2 new rules: LCR & NSFRSimplify to one

3 November 2017

Views expressed are personal only

Innovative discussion of LCR and NSFR – integration of systems

Stepping back to consider the LCR

Is it a usable recovery tool (stigma

“last taxi” problem?)

RRP requirements can dominate LCR

Need broader review of LCR, LOLR and liquidity framework

Appeal of CLF (see Stein 2013)

Slide4

Regulatory Reform Scorecard

TopicStatusRecommendationResolutionSubstantial ProgressNeeds improvementSkeptical, expect severe damage

3 November 2017

Views expressed are personal only

Concerns over: willingness, effectiveness and impact

System not perfect, but funded and usable today:

Can

anyone name a US politician who will

back TARP

2

?

Consider: Tucker, Gruenberg, & Powell comments

Market expectations and debt pricing is working (in US)

US benefits from FDIC infrastructure & history, clear structural separation, and massive resourcing (>$1trillion of

holdco

debt)

Fully agree with proposal for “simple phoenix RRP plan”

Slide5

Regulatory Reform Scorecard

TopicStatusRecommendationOverallClearly safer, More resilient, But. . . Tradeoff – safety v efficiencyWatch regulatory perimeterHerding considerationsInternational fragmentation worry

3 November 2017

Views expressed are personal only

Agree with much of paper – and these other concerns above

From here

: should we further reinforce core FSB reforms?

Diminishing returns

Or should focus shift to other issues?

CCP resilience? Cyber?

Tech Disruption?

Franchise value erosion? Legal uncertainty?

Assets “priced for perfection”

given political shocks & end of QE?

Nationalism

/ Competitive Ring Fencing? Title 1 zealotry?

LOLR / Liquidity design?

Shom More....