EBA欧洲银行-01-Liikanen-Introduction-Slides_23页_1003kb

Summary of the EBA Policy Research Workshop on Financial Stability and Resilience

Core Content

The EBA Policy Research Workshop, titled “How to improve financial stability and resilience of systemically important financial institutions after the crisis?” was held in London on 14 November 2013. It was chaired by Governor Erkki Liikanen of the European Central Bank (ECB) and aimed to explore structural reforms for the EU banking sector in light of the financial crisis. The workshop focused on the need to enhance the stability and efficiency of banks while reducing systemic risks and the reliance on implicit government guarantees.

Main Views

The workshop identified several key lessons from the crisis and proposed reforms to address them:

• Excessive financial expansion and regulatory and management failures were major causes of the crisis, leading to high leverage, complex structures, and inadequate market discipline.
• Implicit subsidies continued to be a concern, as credit ratings and systemic support uplifts indicated that banks still received unearned advantages.
• There was a "chicken-and-egg" problem between market discipline and the structure of banks, with the need to shift from a "bad" to a "good" equilibrium through regulatory intervention.
• Financial market liberalisation and governance must work together to ensure both stability and efficiency in the banking system.

Key Policy Reforms

The High-Level Expert Group (HLEG) proposed several structural reforms to enhance the resilience of banks:

1. Mandatory separation of deposit banking and trading activities.
2. Conditional separation of activities if the bank's recovery and resolution plan is not credible.
3. Bail-in instruments to be used in resolution processes, with pre-defined scope and terms to improve liquidity and pricing.
4. Review of capital requirements on trading assets and real estate-related loans.
5. Strengthening governance and control of banks, including the use of bail-in instruments in compensation.

These reforms aim to:

• Improve the resilience of banks.
• Reduce incentives for excessive risk-taking and leverage.
• Decrease complexity and interconnectedness.
• Reduce the social costs of bank failure and the need for implicit government guarantees.

Structural Reform Proposals

The HLEG considered two main avenues for structural reform:

• Avenue 1: A non-risk-weighted capital requirement for trading activities, combined with conditional separation if the recovery and resolution plan is not credible.
• Avenue 2: Mandatory separation of retail and investment banking, which is seen as a way to reduce the mixing of management cultures and enhance risk-based funding pricing.

The group also evaluated existing structural reform proposals, such as the Vickers report, the Volcker rule, and the Dodd-Frank Act, to inform their recommendations.

State Aid and Central Bank Support

The workshop highlighted the unprecedented state support provided to banks in the EU from 2008 to 2011, which totaled €4.5 trillion (36.7% of EU GDP). This included:

• Guarantees: €1,980 billion
• Liquidity measures: €598 billion
• Recapitalisation: €1,290 billion
• Impaired assets: €421 billion

Additionally, central banks provided more than €1.1 trillion in liquidity support to euro-area banks by mid-2012.

Conclusion

The workshop concluded that banks play a crucial role in society, providing essential services such as payment services, allocating savings to investments, and managing risks. Strengthening their ability to deliver these services efficiently and stably is vital for the well-being of EU citizens, the economy, and the internal market. Therefore, structural reforms are necessary to ensure a safer and more resilient banking system.