Wickman-Parak: New international regulations for banks – a welcome reform
Deputy Governor Barbro Wickman-Parak held a speech at TCO on Friday, 26 November. She described the international reform work of the Basel Committee on Banking Supervision - work that aims to reinforce the banks' resilience to financial problems. The main message is that the resulting reform, Basel III, introduces a number of welcome reforms to the global standards for bank regulation. The banks are to hold larger capital buffers of better quality, entirely new liquidity requirements are being introduced and the banks' risk management is to improve. These proposals contribute to reducing the risk of extensive problems in the bank sector around the world. This benefits Sweden as a small, export-dependent country. We are hit hard when financial crises trigger large falls in production in the global economy. The Swedish banks are also very sensitive to disruptions in the international financial markets, as this is where most of their market funding comes from.
Ms Wickman-Parak also noted that the Basel Committee had on the whole succeeded in a difficult balancing act; the regulations reinforce the banks’ resilience without being too tough and threatening the economic recovery or future growth. However, she points out that the phase-in period for the new regulations is too long. Above all, Ms Wickman-Parak says that neither the Riksbank nor any other authority in Sweden or abroad can now relax and be content with the new regulatory framework. On an international level, for instance, it is important to discuss the regulations for what are known as systemically-important institutions. Here in Sweden, too, we need to further develop the regulatory framework. This applies in particular to the regulations for dealing with banks in distress.
