Book contents
- The Changing Fortunes of Central Banking
- The Changing Fortunes of Central Banking
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Acknowledgement
- 1 Introduction and Overview
- Part I Monetary Economics and Policy
- Part II Financial Stability and Regulatory Policy
- 8 The Macroprudential Toolkit
- 9 Three Cooks or Three Wise Men?
- 10 Liquidity, Default and the Interaction of Financial Stability and Monetary Policy
- 11 Systemic Risk Measurement and Quantification of Systemic Risk Amplification
- 12 What Binds? Interactions between Bank Capital and Liquidity Regulations
- 13 Is Burden Sharing Needed for International Financial Stability?
- Part III Foreign Exchanges and International Architecture
- Part IV The Millennium Challenges of Central Banks
- Index
- References
12 - What Binds? Interactions between Bank Capital and Liquidity Regulations
from Part II - Financial Stability and Regulatory Policy
Published online by Cambridge University Press: 29 March 2018
Book contents
- The Changing Fortunes of Central Banking
- The Changing Fortunes of Central Banking
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Acknowledgement
- 1 Introduction and Overview
- Part I Monetary Economics and Policy
- Part II Financial Stability and Regulatory Policy
- 8 The Macroprudential Toolkit
- 9 Three Cooks or Three Wise Men?
- 10 Liquidity, Default and the Interaction of Financial Stability and Monetary Policy
- 11 Systemic Risk Measurement and Quantification of Systemic Risk Amplification
- 12 What Binds? Interactions between Bank Capital and Liquidity Regulations
- 13 Is Burden Sharing Needed for International Financial Stability?
- Part III Foreign Exchanges and International Architecture
- Part IV The Millennium Challenges of Central Banks
- Index
- References
Summary
This chapter presents a simplified framework in which the risk-weighted capital ratio, the leverage ratio, the liquidity coverage ratio, and the net stable funding ratio are all related to a small set of fundamental bank balance sheet characteristics. Using this framework, we examine the interactions among the requirements to help understand which are likely to bind and how they affect banks’ business models. Our analysis allows us to conclude that the two liquidity requirements almost surely will never bind at the same time and helps us to understand how stress tests can change which capital requirement binds.
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- Information
- The Changing Fortunes of Central Banking , pp. 192 - 202Publisher: Cambridge University PressPrint publication year: 2018
References
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