BANK3011 Lecture Notes - Lecture 11: Basel Iii, Systemic Risk, Foreign Exchange Market

• School: University of Sydney
• Department: Bank Financial Management
• Course: BANK3011
• Professor: Eliza Wu

Document Summary

Initiatives to make individual banks safer (micro-prudential regulation). Initiatives to promote overall financial stability by reducing excessive risk-taking and leverage (macro-prudential regulation). Initiatives to address risks posed by (cid:858)too-big-to-fail(cid:859) (cid:271)a(cid:374)ks. Liquidity requirements (basel iii: detailed supervisory guidance on the management of liquidity risk, minimum global requirements to hold high-quality liquid assets to meet short-term stress (from. Bank financial management: minimum global requirements to fund balance sheets with longer-term and more stable funding sources (from 2018). Incentives: incentives must support the core values and culture of the institution, including how employees are recruited, compensated and promoted, and how wrongdoers are identified and punished. Promoting overall financial stability: financial stability framework pre-crisis, monetary policy, primary focus on price stability. Limit on new interest-only lending of 30% of new housing lending (march 2017). In july 2017, apra announced an additional d-sib capital surcharge of 1. 5%, and a (cid:858)(cid:271)e(cid:374)(cid:272)h(cid:373)a(cid:396)k(cid:859) high-quality capital ratio of 10. 5%. There is potential for coordination problems amongst depositors.