1 / 6

Section 4: Mitigating risks to the UK financial system

Section 4: Mitigating risks to the UK financial system. Chart 4.1 Illustrative example of potential changes to Basel II minimum capital requirements over the economic cycle (a).

aitana
Download Presentation

Section 4: Mitigating risks to the UK financial system

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Section 4: Mitigating risks to the UK financial system

  2. Chart 4.1 Illustrative example of potential changes to Basel II minimum capital requirements over the economic cycle(a) (a) This chart contrasts the volatility of Basel II minimum capital requirements for a fixed portfolio, relative to Basel I. The chart is not intended to make any statement about the level of aggregate Basel II capital requirements relative to Basel I at any stage in the economic cycle.

  3. Chart 4.2 Major UK banks’ sterling stock liquidity requirement relative to total assets(a)(b) Source: FSA regulatory returns. (a) Data exclude Nationwide and Banco Santander. (b) The sterling stock liquidity requirement shown above is calculated as net sterling wholesale liabilities, and 5% of sterling retail deposits, maturing over the next five days. Under the sterling stock liquidity regime (SLR), banks can offset up to 50% of this five-day net wholesale outflow with discounted holdings of other banks’ sterling certificates of deposit. The rest of the sterling stock liquidity requirement must be met with holdings of Bank of England eligible assets.

  4. Table 4.A Market Wide Exercise 2006: issues for follow-up Source: Market Wide Exercise 2006 Report, available at www.fsc.gov.uk/section.asp?catid=468.

  5. Table 4.B Summary assessment of the main wholesale UK payment systems against Core Principles(a) Source: Payment Systems Oversight Report 2006, Bank of England. (a) The Core Principles for Systemically Important Payment Systems, designed by the G10 Committee on Payment and Settlement Systems, provide a set of minimum standards for risk management in systemically important payment systems. See www.bis.org/publ/cpss43.pdf for a description of the Core Principles. (b) The LCH.Clearnet Ltd Protected Payments System (PPS) enables settlement of obligations between LCH.Clearnet Ltd and its members in twelve currencies. The assessment shown above relates to the main three currencies settled, namely sterling, euro and US dollar. One exception to the assessment shown above is that the Bank continues to assess the UK PPS’s arrangements for US dollar settlement partly to observe Core Principle VI, and for the US PPS’s arrangements for US dollar settlement broadly to observe Core Principle VI.

  6. Table 4.C Some recent testing involving the UK Tripartite Authorities(a) (a) Tests involving only one of the authorities are not listed in the table. (b) Testing of phone lines, back-up sites etc. (c) Financial crisis management. (d) www.ecb.int/press/pr/date/2003/html/pr030310_3.en.html. (e) Business continuity planning. (f) www.ecb.int/press/pr/date/2005/html/pr050518_1.en.html.

More Related