“The banking regulators are too often proof of schizophrenia “

Forum. The announcement, on 28 June, the failure of the american subsidiary of the German bank Deutsche Bank in the second phase of the stress test annual of the american federal Reserve, shows that the question of the capitalization of the largest banking groups remains of crucial importance. Ten years after the financial crisis and the bankruptcy of the bank Lehman Brothers, the failure of a bank “systemic” remains at the heart of the concerns of regulators in international banking.

In September 2009, at Pittsburgh (Pennsylvania), the G20 was announced with a bang its decision to reframe global finance. The policy no longer wanted to have to choose between recapitalize shots of public funds, the mega-financial institutions weakened by the abyssal losses (such as the american insurer AIG), or let them go bankrupt (like Lehman Brothers). A strong and coordinated on a global scale was urgently required.

Methodology simple and intuitive

One of the major decisions had been to give a mandate to the financial stability Council to identify financial institutions that contribute most to the risk of the financial system and forcing them to increase their level of regulatory capital. As the latter can absorb the losses, the banks would become mechanically more resilient and the risk of bankruptcy and recapitalization by the State if amenuiseraient.

The methodology used since 2011 in order to identify the banks say systemic is both simple and intuitive. The score of a bank is determined by aggregating five indicators capturing different facets of its contribution to the risk of the system : its size, its interconnections with other banks, its substitutability (that is to say, the ease of transferring the business of a failing bank to another institution), the importance of its international activities, as well as the level of complexity…

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