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New Regulation and the New World of Global Banking

Published online by Cambridge University Press:  26 March 2020

Stephen G. Cecchetti ,
Dietrich Domanski  and
Goetz von Peter
Stephen G. Cecchetti
Affiliation:
∗Bank for International Settlements (BIS), National Bureau of Economic Research, and Centre for Economic Policy Research
Dietrich Domanski
Affiliation:
BIS
Goetz von Peter*
Affiliation:
BIS
*
e-mail [email protected]
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Abstract

Global banks are changing. With a new set of rules come new business models. We review the international dimension of the financial crisis, centring on cross-border losses and cross-currency funding problems that prompted authorities to adopt wide-ranging rescue measures and liquidity operations. Against this background, we proceed to examine the regulatory response, focusing on the Basel III framework and the ongoing work of the Basel Committee and Financial Stability Board regarding the amount of capital banks are required to hold, restrictions on maturity transformation on banks' balance sheets and proposals to mitigate the risks posed by systemically important financial institutions. Our conclusion is that capital and liquidity regulation will have distinctly different effects on the international organisation of banks. Liquidity regulation, especially when applied locally, has the greatest potential to reshape the global banking landscape.

Keywords

Global banksfinancial crisismultinational bankinglocal operationsregulatory reformBasel IIIcapital regulationliquidity regulationF36G01G21G28H12
Type
Research Articles
Information
National Institute Economic Review , Volume 216 , April 2011 , pp. R29 - R40
Copyright
Copyright © 2011 National Institute of Economic and Social Research

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Footnotes

∗

We have benefitted from discussions with a large number of our colleagues, including William Coen, Robert McCauley and Patrick McGuire. Jhuvesh Sobrun provided competent assistance with the figures. The views expressed in this paper are those of the authors and not necessarily those of the BIS.

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