Building a More Resilient Financial Sector : Reforms in the Wake of the Global Crisis

Book
Back Matter

Back Matter

Author(s):
Aditya Narain, Inci Ötker, and Ceyla Pazarbasioglu
Published Date:
April 2012
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    References

    Index

    [Page numbers followed by f, n, or t refer to figures, footnotes, or tables, respectively.]

    A

    • Accountability

      • of macroprudential authorities, 30

      • subsidiarization rationale, 226

      • of supervisors, 5, 20, 21, 93, 94

    B

    • Bail-in proposals, 151–153, 172

    • Bank for International Settlements, 5, 24, 29, 30, 258

    • Bank holding companies, 54, 201, 204, 205, 207, 209

    • Bank Holding Companies Act, 205

    • Basel Committee on Banking Supervision

      • capital and liquidity requirements, 3, 18, 38, 43–52, 57, 161, 182–183

      • countercyclical risk calculation, 29, 41–42

      • Core Principles for Effective Banking Supervision, 87, 88–89

      • Cross-Border Bank Resolution Group, 101, 110–112, 125–127, 191

      • in future of regulatory reform, 258

      • minimum common equity ratio, 144, 163–164

      • phased implementation of capital and liquidity rules, 4, 18–20, 19t, 40, 41t, 46, 64t, 182

      • point of nonviability proposal, 169–170

      • regulatory reform proposals, 38–40

      • on supervision of cross-border operations, 58, 234–235

    • Bear Sterns, 72

    C

    • Capital and liquidity buffers

      • composition, 19–20, 40, 43, 54, 63–64

      • current reform efforts, 3

      • effects of reform proposals on LCFIs, 43–52, 57

      • effects of reform proposals on size of financial system, 254

      • goals for financial system, 1, 16

      • goals of new prudential regulation, 78

      • intangible and qualified assets in, 19–20, 40, 63

      • macroeconomic impact of reforms, 18

      • market-maker obligations to improve, 81

      • methodology for estimating impact of reforms, 61–64

      • origins of global financial crisis, 14, 18

      • phased implementation of Basel III requirements, 4, 18–20, 19t, 40, 41t, 46, 64t, 182

      • reforms in response to global crisis, 18–20, 40–41, 163–164, 182–183

      • risks for centralized LCFIs, 104–105

      • safeguards to prevent systemic risk, 57–58

      • for SIFIs, 8, 145–146, 154, 170, 171

      • See also Contingent capital instruments

    • Central banks

      • access to discount withdrawal facility, 201

      • access to emergency liquidity facilities of, 28, 120, 121, 146, 165, 172

      • in development and use of macroprudential policies, 30

      • regulator relationship, 93

      • risk assessment activities, 82

    • Central counterparties clearance, 27–28, 257

    • Choice between branch and subsidiary structure

      • business model considerations, 226–227, 229–230

      • cost considerations, 225, 237, 242–244

      • credit supply considerations, 232–233

      • current geographical distribution, 227, 231–232t

      • degrees of centralization, 222, 223–224

      • determinants of, 222, 228–230, 238

      • financial stability and, 223–227

      • home/host country factors in, 227, 228–229

      • liquidity management considerations, 226

      • management structure and function, 224

      • policymaker perspective, 232–237, 238

      • resolution considerations, 236–237, 239

      • risk management considerations, 226, 238–239

      • sharing of affiliate losses, 225, 235

      • stand-alone subsidiarization, 236, 241–242t

      • supervision responsibility, 222, 233, 234–235

      • trade-offs in, 221–222, 235–236

      • vulnerability to shocks, 225, 233–235

      • See also Cross-border operations; Subsidiarization

    • Clearing and settlement activities, 27, 54, 77, 79, 81, 127, 226, 257

    • Collateralized debt instruments, 80

    • Collateral valuation, 27

    • Competition

      • distortions associated with SIFIs, 136

      • expected reform outcomes, 11

      • goals for financial system, 1, 17

      • Volcker Rule effects, 209

    • Concentration of banking system, 39f, 134n, 255–256

    • Contingent capital instruments

      • applications, 165, 173

      • conversion rate, 166–167, 180–181t

      • in crisis management framework, 8, 26, 173

      • current interest in, 145, 161

      • with debt write-off features, 166–167

      • design, 173

      • distinctive features, 163

      • future prospects, 167–169, 173

      • versus hybrid instruments, 163, 182–184

      • as loss-absorbing buffer, 170–172

      • modeling of, 163, 173–177

      • monitoring, 173

      • purpose, 162

      • rationale, 8, 145, 161, 163–164

      • recent implementations, 169–172

      • tax and regulatory treatment, 167–168

      • trigger conditions, 26, 164–166, 169–170, 173, 178–179t

    • Contingent convertible bonds. See Contingent capital instruments

    • Counterparty risk, 252, 254, 257

      • Basel Committee proposals, 18, 40, 61, 140

      • branch versus subsidiary model, 226

      • concerns, 27

      • oversight, 73, 76, 81

      • requirements for ring-fenced banks, 211, 214

    • Credit default swaps, 80, 252

    • Credit rating agencies, 28, 204

    • Cross-border operations

      • centralization decisions, 222

      • crisis prevention and preparedness, 109, 111

      • future prospects, 254–255

      • growth of, 103–104

      • implementation of recovery and resolution plans, 192

      • implications for utility banking proposals, 200

      • international standards for supervision, 108

      • need for international coordination on, 237

      • origins of global financial crisis, 2, 38, 238

      • proposal for subsidiary structure of SIFIs, 10, 56–57, 112, 143–144, 190–191

      • as source of systemic risk for host jurisdiction, 105

      • Spanish model, 239–240

      • structure and organization, 104–105, 221–223

      • supervisory function in, 96, 103, 233, 234–235

      • See also Choice between branch and subsidiary structure; Resolution framework for cross-border banks

    D

    • Deferred tax assets, 63–64

    • Deposit guarantee scheme, 120

    • Derivatives markets

      • clearing facilities, 257

      • effects of reforms, 52, 54–55

      • evolution of financial industry supervision, 74, 84

      • scope of regulation, 81

      • strategies for improving resilience of, 27–28

      • systemic risk prevention, 141n

    • Dodd-Frank Act, 54–55, 142, 150 See also Volcker Rule

    E

    • Economic growth

      • effect of capital and liquidity requirement reforms, 18

      • future prospects, 252–253

      • goals of financial system reform, 3, 247

      • risk taking and, 16, 248

      • size of financial sector, 15f

    F

    • Federal Deposit Insurance Corporation, 114n

    • Financial Sector Assessment Program, 20, 32, 87, 258–259

    • Financial Stability Board, 1, 5, 13, 24, 27, 28, 29, 30, 58, 95, 111, 135, 161, 186, 207, 258

    • Financial stability contributions, 22, 25–26

    • Financial Stability Oversight Council, 207, 208t

    • Financial system reforms, generally

      • effects on markets, 256–257

      • effects on size of financial system, 254

      • effects on structure of banking system, 255–256

      • future prospects, 12, 15–16, 32, 248–249, 251–257

      • goals, 1, 2, 3, 11–12, 16–17, 31–32, 247

      • macroprudential strategies for enhancing resilience, 24–30

      • rationale, 59–60t

      • response to global crisis, 2, 3f, 11, 13, 15–16, 35–36, 38–42, 247, 251

      • role of International Monetary Fund, 258–259

      • See also Implementation of reforms; Regulation

    • Fixed income, commodities, and credit instruments, 54–55

    • Fortis Group, 109, 110

    G

    • Glass-Steagall restrictions, 142, 204–205

    • Global financial crisis

      • bail-out rationale for TITFs, 194

      • determinants of country outcomes, 83

      • effects of hybrid capital instruments, 163

      • lessons of, 75, 247

      • origins of, 1–2, 13, 14–15, 27, 35, 37–38, 37f, 73–75, 86, 134, 161, 201–202, 218, 238, 247, 249–251

      • reform efforts in response to, 2, 3f, 11, 13, 15–16, 35–36, 38–42, 72–73, 161

      • regulatory approach preceding, 71–72

      • supervision failures in, 86–87

    • Global systemically important banks, 145, 170

    • Group of Twenty, 1, 13, 22, 27, 30, 38, 71, 96, 101, 186

    H

    • Hedge funds

      • assessment challenges, 207

      • contingent capital instruments market and, 168, 182

      • Glass-Steagall restrictions, 205

      • rationale for regulation, 76, 203

      • regulatory response to crises, 72, 73, 76

      • Volcker Rule requirements, 26, 52, 54, 142, 204, 207

    • Household borrowing, 249

    • Household borrowing and saving, 254

    I

    • Implementation of reforms

      • international framework for resolution, 23–24, 58, 102, 124–125

      • key tasks, 3

      • monitoring effects of, 31

      • need for global consistency and coordination in, 11, 31, 32, 56, 58, 101

      • phased-in capital and liquidity requirements, 4, 18–20, 19t, 40, 41t, 46

      • policy implications of SIFI reform proposals, 216–217

      • prevention of unintended consequences of regulatory reforms, 75

      • private sector role in, 3, 13

      • recovery and resolution plans, 9, 151, 188–189, 191

      • role of international institutions, 13, 32, 33t, 258–259

      • significance of, in reform effectiveness, 87

      • systemic risk shifting in response to, 4, 8, 36, 56, 193, 195, 200, 216–217

    • Independent Commission on Banking (United Kingdom), 144, 204, 209–215, 216

    • Insurance, bank involvement in

      • Basel capital requirements, 45, 53

      • globalization trends, 103

      • market value of, 156

      • principles of supervision, 90

      • reforms in response to global crisis, 72–73

      • supervision before global crisis, 84

    • Interest rates

      • competitive advantages of SIFIs, 136, 136f

      • macroprudential policies to reduce systemic risk, 30

    • International Accounting Standards Board, 258

    • International Association of Deposit Insurers, 258

    • International Association of Insurance Supervisors, 82, 87, 90

    • International Monetary Fund, 2, 5, 13, 17, 18, 24, 27, 28, 29, 30, 32, 33t, 58, 147, 255, 258–259

    • International Organization of Securities Commissions, 80, 81, 82, 87, 89–90, 258

    • International Swaps and Derivatives Association, 127

    • Investment banks

      • branch versus subsidiary structure, 226–227

      • definition, 156

      • effects of regulatory proposals, 52, 53f, 54–55

      • proposed capital and liquidity requirements, 4, 44–45, 52

      • Volcker Rule requirements, 203

    L

    • Large and complex financial institutions (LCFIs)

      • asset composition leading up to crisis, 38

      • definition, 35n

      • effects of proposed capital requirements, 42–47, 61–64

      • effects of proposed liquidity requirements, 42–43, 47–52, 48t

      • effects of proposed regulations, 36–37, 56

      • evolution of financial industry supervision, 85

      • financial system reform needs, 2

      • growth of, 103–104

      • origins of global financial crisis, 2, 35, 37–38, 134, 251

      • reform efforts in response to global crisis, 36

      • risks for centralized organizations, 104–105

      • structure and organization, 104

      • See also Systemically important financial institutions (SIFIs)

    • Lehman Brothers, 22, 27, 72, 109, 110

    • Leveraging of financial system

      • current reform requirements, 40

      • filter rule test, 218–220

      • goals of new prudential regulation, 78

      • origins of global financial crisis, 14, 218, 250

      • rationale for regulation, 75–76, 77

    • Liquidity Coverage Ratio, 40

    • Living wills. See Recovery and resolution plans

    • Long-Term Capital Management, 73, 76

    M

    • Macroprudential policies

      • financial system reform needs, 3, 30

      • goals for financial system reform, 17

      • monetary policy and, 30

      • reform rationale, 59–60t

      • reforms in response to global crisis, 2, 41–42

      • research needs, 30, 31

      • strategies for increasing systemic resilience, 24–29

    • Market functioning

      • branch versus subsidiary structure considerations, 227, 230, 233

      • distortions associated with SIFIs, 136–137

      • entry and exit, 1, 17

      • future prospects, 256–257

      • origins of global financial crisis, 72, 75

      • strategies for enhancing resilience in, 27–29

      • transparency, 29

    • Microprudential policies

      • goals for financial system reform, 17

      • reform rationale, 59–60t

      • reforms in response to global crisis, 2

      • strategies for increasing institutional resilience, 17–24

    • Mortgage servicing rights, 64

    N

    • Narrow funding banks, 193, 195, 201–202, 217

    • Net stable funding ratio, 19, 40–41, 49

      • methodology for assessing impact of, 65–66t

    • Nonbank financial system

      • future prospects, 253

      • in global financial crisis, 15

      • growth of, 16f, 250

      • regulatory goals, 17, 19, 31, 253

      • resolution, 6, 23, 103, 106, 150

    O

    • Off-balance-sheet activities

      • accounting rules, 29, 149

      • current status, 15

      • regulatory reforms, 72

      • supervision, 86, 91

      • trends before global crisis, 35, 72, 84, 249

    P

    • Prevention and preparedness, 109, 111, 251

    • Private equity investments

      • bail-in debt to aid resolution of, 151–153

      • regulatory goals, 76, 82

      • Volcker Rule on, 26, 52, 54, 142, 204, 205

    • Private sector

      • debt-for-equity conversions for resolution, 22–23

      • funding of resolution process, 120–122

      • in implementation of reforms, 3, 13

      • industry views on potential impacts of reforms proposals, 67–69t

      • origins of global crisis, 2

      • supervisor relationship with, 95

    • Procyclicality

      • contingent capital investments and, 8, 170, 173, 183–184

      • current reform efforts, 41–42

      • goal of reforms, 1, 2, 16, 24, 252

      • origins of global financial crisis, 250

      • research needs, 29

    • Proprietary trading

      • complementary regulations to ban on, 216, 217

      • filter rule test, 218–220

      • future prospects, 209, 254

      • LCFI activities, 56n

      • Volcker Rule on, 26, 52, 54, 142, 203, 204, 205, 207, 209

    R

    • Rabobank Senior Contingent Notes, 167

    • Recovery and resolution plans, 22

      • benefits, 188, 191

      • in crisis management framework, 186

      • cross-border implementation, 192

      • data needs for, 187, 188–189

      • definition, 185

      • development of, 187–188

      • effects on business strategy, 56–57

      • goals for SIFIs, 186, 237n

      • implementation challenges, 9, 151, 188–189

      • interaction with other plans, 189–191

      • policy implications, 191–192

      • rationale, 9, 151, 185–186

      • recent implementations, 191

      • recovery component, 186–187

      • resolution component, 187

      • structure, 151

      • subsidiarization and, 237

    • Reducing size of SIFIs

      • challenges to, 10, 143

      • potential negative consequences of, 10, 22

      • rationale, 9, 142, 194

      • recent initiatives, 142–143

      • separation of financial and nonfinancial activities, 79–80, 142–143

      • strategies for, 9, 22

      • structural constraints to, 26–27

      • utility banking proposals, 196–201

    • Regulation

      • branch versus subsidiary structure considerations, 227, 228, 233–235

      • of companies with financial and nonfinancial activities, 79–80

      • conduct-of-business, 77

      • of credit rating agencies, 28

      • current compliance with good practices, 20, 21f

      • design of new prudential regulation, 77–80

      • effects of proposals on LCFIs, 36–37

      • financial system reform needs, 2, 3, 31

      • future prospects, 32, 248, 251–257

      • goals for financial system reform, 17, 73, 75–77

      • implications for bank business strategies, 52–56

      • industry views on potential impacts of proposals, 67–69t

      • lessons from global crisis, 4, 75

      • of nonbank institutions, 253

      • organization and governance of, 80

      • origins of global financial crisis, 2, 4, 13, 14, 15, 37–38, 72, 73–75, 86, 247, 250–251

      • prevention of unintended consequences of, 57–58, 72, 75

      • procyclicality risk, 16, 24, 41–42, 147

      • of products, 80–81

      • rationale for limiting, 71–72, 75

      • rationale for wider perimeter of, 4, 17, 58, 71, 75

      • recommendations for expanded perimeter, 73, 75, 82

      • reform challenges, 4–5

      • reforms in response to global crisis, 2, 3f, 11, 13, 15–16, 35–36, 38–42, 72–73, 248, 251

      • research needs, 31

      • scope of financial institutions subject to, 77, 78–79

      • supervision and, 5, 93

      • systemic risk assessment to determine boundaries of, 25, 82

      • systemic risk shifting in response to, 4, 8, 36, 56, 193, 195, 200, 216–217, 253

    • Remuneration practices, 74

    • Repo markets, 27

    • Resolution framework for cross-border banks

      • authority for, 116–117, 125

      • basic elements, 114–115

      • challenges to development, 6, 9

      • communication and information management in, 124

      • coordination standards for, 115, 116–119, 255

      • corporate solvency model, 112–114

      • costs of current approach, 108–109

      • creditor safeguards in, 117, 118

      • Cross-Border Bank Resolution Group initiatives, 110–112, 125–127

      • current status, 150, 255

      • deposit guarantee scheme, 120

      • funding of resolution process, 115, 120–122

      • harmonization of national law for, 116–118

      • implementation issues, 23–24, 58, 102, 124–125

      • leadership for implementation, 122–123

      • modification of national law for, 114, 115–116

      • national frameworks, 105–107

      • need for, 6, 17, 58, 101–102, 103–104, 124, 153, 237, 239

      • nonbank institutions and, 103, 106, 123

      • objectives, 101–102, 251

      • obstacles to, 150

      • proposed structure, 6, 23

      • risk mitigation mechanisms, 126–127

      • scope of activities in, 102

      • strategies for, 22

      • supervision frameworks and, 103, 107, 108, 118–119

      • territoriality approach to insolvencies, 107

      • transfer of contractual relationships, 127

      • treaty approach, 102, 111–112

      • United Nations Model Law, 113, 127–131

      • universality approach to insolvencies, 107, 111–112, 114

      • See also Cross-border operations

    • Resolution of failed institutions

      • bail-in power to aid in, 151–153, 172

      • cross-border banks. See Resolution framework for cross-border banks

      • current status of plans for, 6

      • debt-to-equity conversions for, 22–23, 151

      • funding for cost of, 22

      • goals for financial system, 1, 3, 16, 17

      • lesson from global crisis, 22

      • levy on SIFIs to reduce effects of, 22, 25–26

      • origins of global financial crisis, 251

      • proposed framework, 23–24

      • reform challenges, 6, 23

      • SIFIs, 6–7, 8, 149–151

      • significance of, in reform effort, 6, 22

      • strategies for, 22

      • use of contingent capital instruments, 165, 166

      • See also Recovery and resolution plans

    • Ring-fencing

      • capital costs, 242–244

      • cross-border resolution and, 23, 105, 106, 130

      • motivation, 107, 115, 195, 210

      • policy implications, 195

      • protection from contagion, 211–212

      • recent policy formulations, 142–143, 193, 195, 209–210

      • requirements under, 195, 210–211, 213–214

      • retail operations, 214–215

      • See also Subsidiarization

    • Risk management

      • benefits of utility banking, 197–198

      • counterparty clearance, 257

      • current trends in global financial system, 252–253

      • economic growth and, 16, 248

      • goals of regulation, 75–77

      • goals of Volcker Rule, 203

      • growth of cross-border operations, 104

      • incentives, 73, 79, 248

      • levies and surcharges to improve, 25–26, 144–145, 146–147

      • liquidity risk assessment, 146, 146n

      • models of bailout and, 173–177

      • origins of global financial crisis, 2, 13, 14, 35, 37–38, 72, 73–75, 250–251

      • prevention of unintended consequences of reforms, 57–58, 72, 75, 216–217

      • procyclicality effects, 29

      • rationale for contingent capital instruments, 163, 164–166

      • rationale for limiting prudential regulation, 71–72

      • recommendations for capital and liquidity requirements, 18

      • remuneration practices and, 74

      • securitization and, 28–29

      • shielding ring-fenced banks from contagion, 211–212, 213–214

      • in SIFIs, 8, 194

      • strategies to reduce systemic risk, 25–27, 35–36

      • supervision failures in global financial crisis, 86–87

      • systemic risk assessment, 24–25, 73, 82

      • TITF problem, 133–134

      • in traditional banking, 193–194

      • transparency and disclosure for, 5

      • See also Reducing size of SIFIs; Regulation; Supervision

    S

    • Securities market

      • origins of global financial crisis, 74–75

      • reforms in response to global crisis, 72–73

      • scope of regulation, 81

      • Volcker rule effects on competition in, 209

    • Securitization

      • effects of reforms, 52

      • evolution of financial industry supervision, 84

      • future of regulation, 29, 253

      • origins of global financial crisis, 28, 74, 75

      • reforms in response to global crisis, 28–29

    • Shadow banking

      • assets, 71

      • definition, 56n

      • financial sector interconnectedness, 38

      • growth, 16f

      • liabilities preceding crisis, 39f

      • origins of global financial crisis, 15, 38, 39f

      • systemic risk shifting in response to regulation, 4, 8, 36, 56, 193, 195, 200, 216–217, 257

    • Special Investment Vehicles, 76, 77

    • Stand-alone subsidiarization, 236, 241–242t

    • Subsidiarization

      • allowable activities, 210–211

      • assessment challenges, 213–214

      • costs, 144, 190–191, 242–244

      • home/host country policy decisions, 232–237

      • implementation in United Kingdom, 209–215

      • management structure, 212

      • objective, 210

      • organization of retail banking, 214–215

      • protection from contagion, 211–212

      • prudential capital constraints, 212, 212t

      • rationale, 10, 56–57, 112, 143–144, 195, 210

      • restrictions on intragroup transactions, 212, 213–214

      • systemic risk for host jurisdiction in, 105

      • See also Choice between branch and subsidiary structure; Ring-fencing

    • Supervision

      • accountability for, 21, 93, 94

      • agency mandates for, 20, 21

      • characteristics of financial industry oversight, 84

      • colleges, 111, 119n, 255

      • compliance-based, 84

      • of cross-border operations, 96, 222, 233, 234–235

      • current compliance with good practices, 20, 21f, 87–90

      • as determinant of financial crisis outcomes, 83

      • development of recovery and resolution plans, 188

      • enforcement-based, 84

      • evolution of, in financial industry, 84–85

      • financial system reform needs, 2, 3, 17

      • framework for enhancing, 20, 21

      • future prospects, 252

      • goals for new prudential regulation, 78

      • international cooperation in resolution and, 103, 107, 108, 118–119

      • international standards, 98–100t, 108, 118–119, 255

      • legal authority, 92

      • lessons from global crisis, 85

      • objectives, 94

      • operational independence for, 94

      • organization and processes, 93

      • origins of global financial crisis, 2, 13, 86–87, 247, 250–251

      • professional status, 96

      • recommendations for, 95–96

      • reforms in response to global crisis, 72–73

      • regulation and, 5, 93

      • relationships with other agencies, 93

      • relationship with industry, 95

      • requirements for effectiveness, 5, 20, 85, 90–95, 97

      • resources for, 21, 92, 94, 96

      • ring-fenced banks, 213–214

      • risk assessment capacity for, 21

      • risk-based, 84

      • scope of activities in, 83

      • of SIFIs, 5, 8, 147–148

      • significance of, in reform effort, 5, 20, 83

      • strategy for, 21, 93

      • Volcker Rule implementation challenges, 207

    • Swap Push-out Rule, 143

    • Systemically important financial institutions (SIFIs)

      • bail-in power to aid resolution of, 151–153, 172

      • bail-out decisions, 139, 140, 194

      • benefits of, 135–136, 221

      • capital and liquidity buffer requirements, 145–146, 154, 170, 171

      • competitive advantage, 136–137

      • cross-border activity, 138

      • current risk mitigation efforts, 2, 41–42, 42t 140

      • data template for, 5

      • definition, 73, 75–76, 133n

      • design of new prudential regulation, 78–80

      • economies of scale/scope, 155

      • financial stability contributions, 22, 25–26

      • frequency of distress, 138–139, 138f

      • future prospects, 135, 154

      • interconnectedness, 134, 137f, 138

      • interest rates charged to, 136, 136f

      • market value, 155–156

      • origins of global financial crisis, 134, 194

      • outcomes of global financial crisis, 134

      • policy implications of reform proposals, 216–217

      • political influence, 137

      • recent growth, 137, 137f, 139–140

      • recovery and resolution plans, 151, 186

      • reform challenges, 6–8, 143

      • reform goals, 11–12, 73, 135, 140

      • resolution strategies, 22, 149–151

      • risk assessment, 24–25, 73

      • risk-based levies and surcharges, 25–26, 144–145, 146–147

      • risk-based prudential requirements, 25

      • risk of unintended consequences in

      • rescoping of, 195–209, 216–217

      • risks associated with, 194, 221

      • size characteristics, 137–138, 157–159

      • strategies for risk reduction, 8, 25–27, 135, 140, 141–142, 141f, 194–195, 221

      • subsidiarization proposals, 10, 56–57, 105, 112, 143–144, 190–191

      • supervision needs, 5, 147–148

      • transparency of operations, 8, 148–149

      • See also Recovery and resolution plans; Reducing size of SIFIs; Too-important-to-fail institutions

    T

    • Taxation

      • branch versus subsidiary structure considerations, 227, 228–229

      • of multinational groups, 104

      • to reduce institutional risk taking, 26

      • risk-related levies and surcharges, 144–147

      • treatment of contingent capital instruments, 167

    • Too-important-to-fail institutions

      • bail-out rationale, in global crisis, 194

      • capital and liquidity buffer requirements, 154

      • contingent capital strategies for, 162–164

      • financial system reform needs, 2

      • nature of risk associated with, 133–134, 153, 221

      • origins of global financial crisis, 2, 15, 134

      • outcomes of global financial crisis, 134

      • strategies to reduce risk from, 153–154, 221

      • See also Recovery and resolution plans; Reducing size of SIFIs; Systemically important financial institutions (SIFIs)

    • Traditional commercial banks

      • efficient size, 155

      • growth, 16f

      • liabilities preceding crisis, 39f

      • ownership concentration, 39f

      • proposed capital and liquidity rules, 4, 52

      • Volcker Rule requirements, 203

    • Transparency

      • to assess systemic risk, 73

      • expected reform outcomes, 11

      • financial system reform needs, 2, 5

      • future prospects, 256–257

      • goals for financial system, 1, 16, 17

      • origins of global financial crisis, 14, 37–38

      • in SIFIs, 8, 148–149

      • significance of, in reform effort, 5

      • strategies for enhancing market stability, 29

    U

    • United Nations Commission on International Trade Law, 112–114, 116n, 127–131

    • Universal banks

      • branch versus subsidiary structure, 222, 226–227

      • current capital structure, 43

      • definition, 103n, 156

      • growth of, 103–104, 194

      • proposed capital requirements, 44–45, 46, 53

      • ring-fencing, 209–210, 211, 213

      • SIFI banks, 138, 139, 140

      • transformation into utility banks, 196f, 200–201, 216

      • Volcker Rule and, 52, 54

      • vulnerability to shocks, 194

    • Utility banking

      • adjustment costs, 200–201

      • definition, 196

      • impact analysis, 199t

      • implementation challenges, 200

      • policy implications of SIFI reform proposals, 216–217

      • rationale, 196

      • risk reduction benefits, 197–198

      • scope of proposals for, 196–197, 197f social costs, 198–199

      • transformation of universal banking into, 196f, 201, 216f

    V

    • Volcker Rule

      • challenges to implementation, 195

      • effects on competitiveness in securities markets, 54, 209

      • essential requirements, 26, 52, 56, 195, 204–205, 205f, 206t implementation, 204

      • implementation challenges, 193, 205–209

      • Independent Commission on Banking ring-fencing rules and, 214, 215t, 216

      • rationale, 142–143, 203–204

      • risk of unintended consequences, 193, 195, 209

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