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

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

No 2013/004, IMF Staff Discussion Notes from International Monetary Fund

Abstract: 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.

Keywords: SDN; resolvability assessment; loss experience; EU bank; financial system; market risk; Bank business models; capital; least cost resolution; risk reduction; structural measures; bank resolution; groupwide bank risk management; Structural reforms; Bank resolution; Systemic risk; Global (search for similar items in EconPapers)
Pages: 27
Date: 2013-05-14
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Citations: View citations in EconPapers (9)

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