The Elephant in the Room: The Need to Deal with What Banks Do

Un nouveau papier de l’OCDE revient sur la problématique de la gouvernance des institutions financières et en particulier celles devant être considérées comme « too big to fail ».

un petit clic pour ma veille

Ce papier rappelle l’importance qu’elle attache à  la transparence, à  l’utilisation de normes comptables comparables, aux principes de bonne gouvernance et également à  la nécessité de prendre en compte l’effet de levier au niveau des groupes pour fixer leurs exigences de fonds propres.

Organisation for Economic Co-operation and Development Contagion risk and counterparty failure have been the main hallmarks of the current crisis. While some large diversified banks that focused mainly on commercial banking survived very well, others suffered crippling losses. Sound corporate governance and strong riskmanagement culture should enable banks to avoid excessive leverage and risk taking. The question is whether there is a better way, via leverage rules or rules on the structures of large conglomerates, to ensure volatile investment banking functions do not dominate the future stability of the commercial banking and financial intermediation environment that is so critical for economic activity. While there is a main consensus on the need for reform of capital rules, dynamic provisioning, better co-operation for future crises, centralised trading of derivatives etc., the question is whether such reforms will be sufficient if they do not address contagion and counterparty risk directly. The world outside of policy making is waiting for a fundamental reassessment of banks' business models: what banks are supposed to do and how they compete with each other. It is the “elephant in the room” on which some policy makers have not yet had the time or inclination to focus. This article emphasises not only the need for transparent and comparable accounting rules and for improvements in corporate governance, but also supports the imposition of a group leverage ratio to provide a binding capital constraint (that Basel riskweighted rules have been unable to achieve) and proposes a Non- Operating Holding Company Structure (NOHC) – reforms that are essential to deal with contagion and counterparty risk that are so integral to the ‘too big to fail' issue.

via The Elephant in the Room: The Need to Deal with What Banks Do.

Veilleur et spécialiste en cybersécurité