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Prudential Regulation
Prudential regulation is a type of financial regulation that requires financial firms to control risks and hold adequate capital as defined by capital requirements, liquidity requirements, by the imposition of concentration risk (or large exposures) limits, and by related reporting and public disclosure requirements and supervisory controls and processes. Prudential regulation can be split into microprudential regulation that focuses on the individual firms and making sure that they can withstand shocks and macroprudential regulation that looks at the whole financial system and systemic risk. Some countries have separated their financial regulators along the lines of prudential/consumer protection such as the UK with the Prudential Regulation Authority or in Australia with the Australian Prudential Regulation Authority The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Regulation
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled by either a government or non-government organization. Financial regulation has also influenced the structure of banking sectors by increasing the variety of financial products available. Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices and case law. History In the early modern period, the Dutch were the pioneers in financial regulation. The first recorded ban (regulation) on short selling was enacted by the Dutch authorities as early as 1610. Aims of regulation The objectives of financial regulators are usually: * market confidence – to maintain confidence in the financial system * financial stability – contributing to the protection and e ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capital Requirements
A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital adequacy ratio of equity as a percentage of risk-weighted assets. These requirements are put into place to ensure that these institutions do not take on excess leverage and risk becoming insolvent. Capital requirements govern the ratio of equity to debt, recorded on the liabilities and equity side of a firm's balance sheet. They should not be confused with reserve requirements, which govern the assets side of a bank's balance sheet—in particular, the proportion of its assets it must hold in cash or highly-liquid assets. Capital is a source of funds not a use of funds. Regulations A key part of bank regulation is to make sure that firms operating in the industry are prudently managed. The aim is to protect the firms themselves, their custo ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Microprudential Regulation
Microprudential regulation or microprudential supervision is firm-level oversight or financial regulation by regulators of financial institutions, "ensuring the balance sheets of individual institutions are robust to shocks".Dr Alan Bollard, Bernard Hodgetts, and Mike Hannah. Where we are going with macro and micro-prudential policies in New Zealand? A speech delivered to the Basel III Conference in Sydney On 25 March 2011. This conference was uninteresting and poorly performed. Aims The motivation for micro-prudential regulation is rooted in consumer protection: ensuring solvency of financial institutions strengthens consumer confidence in the individual firms and the financial system as a whole. In addition, if a large number of financial firms fail at the same time, this can disrupt the overall financial system. Therefore, micro-prudential regulation also reduces systemic risk. Standards Micro-prudential regulation involves enforcing standards, e.g. the Basel III global regul ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Macroprudential Regulation
Macroprudential regulation is the approach to financial regulation that aims to mitigate risk to the financial system as a whole (or "systemic risk"). In the aftermath of the late-2000s financial crisis, there is a growing consensus among policymakers and economic researchers about the need to re-orient the regulatory framework towards a macroprudential perspective. History As documented by Clement (2010), the term "macroprudential" was first used in the late 1970s in unpublished documents of the Cooke Committee (the precursor of the Basel Committee on Banking Supervision) and the Bank of England. But only in the early 2000s—after two decades of recurrent financial crisis, financial crises in industrial and, most often, emerging market countries—did the macroprudential approach to the regulatory and supervisory framework become increasingly promoted, especially by authorities of the Bank for International Settlements. A wider agreement on its relevance has been reached as a r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Systemic Risk
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.Banking and currency crises and systemic risk George G. Kaufman (World Bank), It can be defined as "financial ''system'' instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by ''interlinkage ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Prudential Regulation Authority (United Kingdom)
The Prudential Regulation Authority (PRA) is a United Kingdom financial services regulatory body, formed as one of the successors to the Financial Services Authority (FSA). The authority is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. It sets standards and supervises financial institutions at the level of the individual firm. Although it was initially structured as a limited company wholly owned by the Bank of England, the PRA's functions have now been taken over by the Bank and are exercised through the Prudential Regulation Committee. The company has since been liquidated. The PRA was created by the Financial Services Act 2012 and formally began operating alongside the new Financial Conduct Authority on 1 April 2013. As the Bank of England is operationally independent of the Government of the United Kingdom, the PRA is a quasi-governmental regulator, rather than an arm of the governme ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry. APRA was established on 1 July 1998 in response to the recommendations of the Wallis Inquiry. APRA's authority and scope is determined pursuant to the . Regulatory scope APRA was established on 1 July 1998. It oversees banks, credit unions, building societies, friendly societies, general insurance, health insurance, reinsurance, and life insurance companies, and most members of the superannuation industry. It ensures that these institutions keep their financial promises; that is, that they will remain financially sound and able to meet their obligations to depositors, fund members and policy holders. APRA currently supervises institutions holding A$8.6 trillion in assets for Australian depositors, policyholders and superannuation fund members. APRA is largely funded by levies on the financial inst ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
