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Systemic risk, macroprudential policy frameworks, monitoring financial systems and the evolution of capital adequacy

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  • Arnold, Bruce
  • Borio, Claudio
  • Ellis, Luci
  • Moshirian, Fariborz

Abstract

This paper analyses various issues that need to be tackled when promoting financial stability, reviewing the progress made in certain key areas and the remaining challenges. It explores the measurement of systemic risk and of individual institutions’ contribution to it. It discusses aspects of macroprudential frameworks, including how the countercyclical capital buffer envisaged in Basel III takes into account the properties of the financial cycle and the strengths and weaknesses of macro-stress tests. It analyses some of the challenges of how best to monitor financial systems and the broader economy in order to detect signs of vulnerability that might lead to future bouts of financial instability and of how to set prudential policy accordingly. And it discusses the evolution of capital adequacy standards and the new emphasis on liquidity standards in international regulation.

Suggested Citation

  • Arnold, Bruce & Borio, Claudio & Ellis, Luci & Moshirian, Fariborz, 2012. "Systemic risk, macroprudential policy frameworks, monitoring financial systems and the evolution of capital adequacy," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3125-3132.
    • Handle: RePEc:eee:jbfina:v:36:y:2012:i:12:p:3125-3132
    DOI: 10.1016/j.jbankfin.2012.07.023
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    More about this item

    Keywords

    Systemic risk; Macroprudential polices; Monitoring financial systems; Capital adequacy;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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