The Riksbank's consultation response on the report on new capital requirements
Date
20/11/2013
The Executive Board of the Riksbank welcomes the report of the commission of inquiry into new capital adequacy regulations (SOU 2013:65) and supports several of the commission's proposals regarding how the EU Directive should be introduced into Swedish legislation and how Swedish law should be amended with regard to the EU Regulation.
All capital buffers should be introduced into Swedish law – reduced risk of new financial crises
The Riksbank supports the commission of inquiry's proposal to introduce into Swedish law all of the capital buffers mentioned in the Directive. Moreover, the Riksbank supports the commission's assessment that the provisions for the capital conservation buffer and the countercyclical capital buffer should begin to apply as soon as possible, as this will contribute to safeguarding financial stability.
The Riksbank also welcomes the proposal to introduce provisions on a systemic risk buffer to be able to further tighten the capital requirements if this is necessary to counteract structural systemic risk.
The Riksbank supports the commission's proposal that models based on calculations are required for establishing the countercyclical capital buffer, but wishes to highlight the need to also use qualitative assessments of the sustainability of credit growth and the level of cyclical systemic risk.
The Riksbank considers that Finansinspektionen ought not only to take into account the risk to which an institution is exposed, but also the risk to which an institution exposes the financial system when assessing whether to propose that the institution should have a special own fund requirement. This would increase increase flexibility for Finansinspektionen in its assessment of the capital requirements of the institution.
The Riksbank is also of the opinion that requirements for public decisions regarding an institution's special own fund requirement, and for the banks to publish the special own fund requirements imposed on them ought to be introduced into Swedish law. This would make it easier for external market participants to perform a risk assessment of the bank. The Riksbank finds that such legislation is a natural step towards greater transparency.
Consultation between authorities regarding macroprudential policy tools
The Riksbank sees no reason to comment further on the commission's proposal regarding the choice of competent authority for the countercyclical capital buffer, as conditions have changed as a result of the Swedish Government's declaration of intent regarding a strengthened financial stability framework. However, the Riksbank wishes to emphasise that it is natural to have a smoothly functioning consultation between the authorities with regard to macroprudential tools, especially the cyclical ones.
Read the entire consultation response to the report stronger capital adequacy regulations (SOU 2013:65) .
