The future structure of banks' capital requirements

At the Financial Stability Council meeting of 15 June, Finansinspektionen presented its views on the future structure of banks' capital requirements.

The main conclusions presented by the paper are that:

  • The introduction of a high leverage ratio requirement could impact negatively on financial stability.
  • There is scope for improvements to the current risk-based framework, (such as reducing model risks) which could lead to capital requirements rising considerably over the coming years.
  • FI does not currently see any justification for raising capital requirements to reduce the value of the implicit state guarantee.

In addition to the paper presented by FI, the Riksbank also presented a paper with their view on the need to reform capital requirements for Swedish banks.

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