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Back Matter

Source:
Building a More Resilient Financial Sector : Reforms in the Wake of the Global Crisis
Published Date:
April  2012
Author:
Inci Ötker, Ceyla Pazarbasioglu, Aditya Narain
References

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                                                                                                                                                                                                    Miles, D.,J. Yang, andG. Marcheggiano, 2011, “Optimal Bank Capital,Discussion Paper 31 (London: Bank of England, External MPC Unit), January.

                                                                                                                                                                                                      Mishkin, Frederic S.,Financial Consolidation: Dangers and Opportunities, Journal of Banking and Finance Vol. 23 (February), pp. 67591.

                                                                                                                                                                                                        Nier, E.W., 2009, “Financial Stability Frameworks and the Role of Central Banks: Lessons from the Crisis.IMF Working Paper No. 09/70 (Washington: International Monetary Fund). www.imf.org/external/pubs/ft/wp/2009/wp0970.pdf

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                                                                                                                                                                                                              Palmer J., 2009, “Can We Enhance Financial Stability on a Foundation of Weak Financial Supervision? Revista de Estabilidad Financiera No. 17 (Madrid: Banco de España, November).

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                                                                                                                                                                                                                        Schmid, M. M., andI. Walter, 2009, “Do Financial Conglomerates Create or Destroy Economic Value? Journal of Financial Intermediation Vol. 18, pp. 193216.

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                                                                                                                                                                                                                              Song, I., 2004, “Foreign Bank Supervision and Challenges to Emerging Market Supervisors,IMF Working Paper No. 04/82 (Washington: International Monetary Fund).

                                                                                                                                                                                                                                Standard and Poor’s, 2011, “Industry Risk for Investment Banking Is Generally Higher than for Other Financial Institutions” (January 6).

                                                                                                                                                                                                                                Stiroh, K. J., andA. Rumble, 2006, “The Dark Side of Diversification: The Case of U.S. Financial Holding Companies, Journal of Banking and Finance Vol. 30, pp. 2131161.

                                                                                                                                                                                                                                  Strauss-Kahn, D., 2010, “Reject Ad-Hoc, National Financial Reforms,Op-ed, Financial Times, February 17.

                                                                                                                                                                                                                                    Sundaresan, S., andZ. Wang, 2010, “Designing of Contingent Capital with a Stock Price Trigger for Mandatory Conversion,Staff Paper No. 448 (New York: Federal Reserve Bank of New York).

                                                                                                                                                                                                                                      Swiss Financial Market Supervisory Authority, 2011, “Addressing ‘Too Big To Fail’: The Swiss SIFI Policy” (June 23).

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                                                                                                                                                                                                                                            UNCITRAL, 2009b, UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation.

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                                                                                                                                                                                                                                            United Kingdom, Independent Commission on Banking, 2011, Interim Report: Consultation on Reform Options (London, April).

                                                                                                                                                                                                                                            United States House of Representatives, 2009, Wall Street Reform and Consumer Protection Act of 2010, §1609(a)(1)(L) (Passed by the House of Representatives on December 11) (Washington).

                                                                                                                                                                                                                                              United States House of Representatives, 2010, The Dodd-Frank Wall Street Reform and Consumer Protection Act, H.R. Bill No. 4173, 111th Congress of the United States (July 21) (Washington).

                                                                                                                                                                                                                                                United States Senate, 2010, Restoring American Financial Stability Act of 2010, §210(a)(1)(N), (Washington, May).

                                                                                                                                                                                                                                                  van Lelyveld, I., andK. Knot, 2009, “Do Financial Conglomerates Create or Destroy Value? Evidence for the EU, Journal of Banking and Finance, Vol. 33, pp. 2312321.

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                                                                                                                                                                                                                                                          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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