IMF Staff Presents New CCyB Trigger
A new IMF paper weighs into an important question inherent in the new construct of U.S. regulatory capital: how to set the counter-cyclical capital buffer (CCyB) to anticipate financial stress. As noted in a recent Karen Petrou memo, the Basel CCyB (see FSM Report CAPITAL173) is linked to a ratio of credit growth to GDP; the Fed’s CCyB (see FSM Report CAPITAL213) gives the Fed unlimited discretion to sound the capital alarm or release the buffer.
GAO Asks Banking Agencies To Focus On Blockchain, Alternative Data, PCA
The GAO today issued its annual policy recommendations to the federal banking agencies and the SEC. All of the agencies are asked to coordinate policy on blockchain to better address risks; the agencies neither agreed nor disagreed, each flagging routine interagency engagement. GAO maintains that coordination efforts have failed to address cryptoasset risks in a timely manner.
Warren Presses Goldman Hard on SVB Conflicts
Not letting one letter to Goldman Sachs suffice when it comes to SVB, Sen. Warren (D-MA) yesterday sent another letter to the bank taking serious issue with its response, particularly regarding the steps it took to avoid conflicts of interest.
OCC Targets Fintech Partnerships
Continuing its fintech-partnership crackdown, the OCC today clarified that its legal lending-limit standards apply to purchased loans and particularly to those purchased from nonbanks.
IMF Reiterates Need for U.S. Mid-sized Bank Regs, Better Contingency Funding
Building on its prior assessment of U.S. performance in its most recent financial-stability review, the IMF today cautioned the U.S. to focus more on smaller-bank vulnerabilities and closely monitor asset markets, bank earnings, and run risk interlinkages. The U.S. and other jurisdictions are also advised to continue to address systemic liquidity risks and spillover effects.
Fed Sets New Course on Novel Activities, Tokenization
Eschewing formal action that might have required publication for comment, the FRB this afternoon released “information” on how it supervises “novel” activities at BHCs and state member banks such as complex fintech partnerships, DLT utilization, and cryptoassets along with a new non-objection process for state member banks related to stablecoins and other dollar tokens.