The evolution of the Pillar 2 framework for banks: some thoughts after the financial crisis

Marco Bevilacqua (), Francesco Cannata (), Raffaele Arturo Cristiano (), Simona Gallina (), Michele Petronzi () and Silvia Cardarelli ()
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Marco Bevilacqua: Bank of Italy
Francesco Cannata: Bank of Italy
Raffaele Arturo Cristiano: Bank of Italy
Simona Gallina: Bank of Italy
Michele Petronzi: Bank of Italy
Silvia Cardarelli: Bank of Italy

No 494, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper examines the evolution of the Pillar 2 framework for banks, introduced by the Basel 2 Accord, and discusses the main issues at stake in the current policy debate. The main objective of Pillar 2 was to complement the minimum requirements established by regulators (Pillar 1) with tailored supervisory measures based on a thorough assessment of banks� risk profiles. However, its implementation coincided in most jurisdictions with the outbreak of the global financial crisis: the main policy objective became to restore the stability of the global financial system. In this context, Pillar 2 contributed significantly to enhance supervisory action, in particular by raising capital requirements. Nevertheless, a number of issues still remain. Today, in the run-up to the completion of the post-crisis regulatory reform, the debate has regained momentum and a sound supervisory framework can be finalized under more favorable conditions, to avoid that Pillar 2 loses its key properties.

Keywords: Pillar 2; SREP; Single Supervisory Mechanism; Basel; Stress Test; ICAAP (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-cba and nep-rmg
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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