![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
Home-host complications are a worthwhile consequence of financial stability, according to BIS manager
General manager of the Bank for International Settlements (BIS), Malcolm Knight, has said that cross-border issues are a symptom of economic soundness, as they indicate well-thought out regulation and appropriate implementation of Basel II.
“There is a clear tension between the call for uniformity demanded by the global capital marketplace and country-specific circumstances: this is a hard call to make,” Knight said, acknowledging the industry’s current concerns over home-host issues. Citing differing regulatory cultures of rules-based and principles-based approaches, Knight agreed that developing a universal best practice and levelling the playing field would be challenging.
However, Knight argued that home-host problems were a necessary side-effect of effective supervision. “To my mind, this puts a premium on soundness over uniformity per se, and on patience over haste. I therefore fully endorse the view taken by the Basel Committee and the international financial institutions, for instance, that countries should adopt Basel II only when ready, even though this naturally complicates cross-border issues.”
Knight’s statement may not please some in the industry, who believe that action needs to be taken now to solve difficulties that may arise over home-host issues. “The problem is that regulators are not attempting to rectify home-host issues, let alone admit they will exist. Of course countries should only implement [Basel II] when ready. But regulators are doing nothing to remedy the situation,” said one risk officer.
Knight was speaking at the Bank of Spain Conference in Madrid.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Basel Committee
FRTB implementation: key insights and learnings
Duncan Cryle and Jeff Aziz of SS&C Algorithmics discuss strategic questions and key decisions facing banks as they approach FRTB implementation
Basel concession strengthens US opposition to NSFR
Lobbyists say change to gross derivatives liabilities measure shows the whole ratio is flawed
Basel’s Tsuiki: review of bank rules no free-for-all
Evaluation of new framework by Basel Committee will not be excuse for tweaking pre-agreed rules
Pulling it all together: Challenges and opportunities for banks preparing for FRTB regulation
Content provided by IBM
EU lawmakers consider extending FRTB deadline
European Commission policy expert says current deadline is too ambitious
Custodians could face higher Basel G-Sib surcharges
Data shows removal of cap on substitutability in revised methodology would hit four banks
MEP: Basel too slow to deal with clearing capital clash
Isda AGM: Swinburne criticises Basel’s lethargy on clash between leverage and clearing rules
Fears of fragmentation over Basel shadow banking rules
Step-in risk guidelines could be taken more seriously in the EU than in the US