Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Biggest banks to hold more capital: Yellen

United States Federal Reserve chair Janet Yellen has flagged the possibility of “the largest, most complex banking organisations” holding larger amounts of capital.

In a pre-recorded video last week, Ms Yellan said the Basel Committee’s Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) do not fully address the financial stability concerns associated with short-term wholesale funding.

“These standards tend to focus on the liquidity positions of firms taken in isolation, rather than on the financial system as a whole,” she said.

Advertisement
Advertisement

“They only apply to internationally active banks, and not directly to shadow banks, despite the fact that liquidity shocks within the shadow banking system played a major role in the crisis.

“Furthermore, the current versions of the LCR and NSFR do not address financial stability risks associated with so-called matched books of securities financing transactions."

Federal Reserve staff are actively considering additional measures that could address these and other residual risks in the short-term wholesale funding markets, Ms Yellan said.

“Some of these measures - such as requiring firms to hold larger amounts of capital, stable funding, or highly liquid assets based on use of short-term wholesale funding - would likely apply only to the largest, most complex banking organisations,” she said.

“Other measures - such as minimum margin requirements for repurchase agreements and other securities financing transactions - could, at least in principle, apply on a market-wide basis.”

In designing such measures, the Fed is carefully thinking through questions about the trade-offs associated with tighter liquidity regulation.

 

 

Biggest banks to hold more capital: Yellen
mortgagebusiness

 

Latest News

The federal government has commissioned the ACCC to conduct a new inquiry into the pricing of home loan products in Australia’s mortgage...

The ABS has reported an investor-driven “pop” in home loan activity, which, according to ANZ Research, could be a cause for “concern...

The major bank has pledged $2 billion in funding and services to assist not-for-profit affordable and specialist housing providers, includin...

FROM THE WEB
podcast

LATEST PODCAST: Mortgage pricing and product switching

Do you think the mortgage market will see more consolidation this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.