Quant Congress Europe: Regulatory focus to switch to leverage

At the keynote address at the European Quant Congress in London today, Peter Praet, executive director in charge of financial stability at the National Bank of Belgium, said that the Basel II regulatory framework will be revised to look more closely at leverage.

Praet, who in addition to his day job is the chairman of the banking supervision committee of the European Central Bank and co-chair of the research task force at the Basel Committee of Banking Supervision, said the current risk-based capital approach had proved inadequate during the financial crisis.

“We spent years designing a framework for bank regulation that would provide an incentive for the best practices in risk management to be rewarded in terms of lower capital requirements,” Praet