Regulatory Alerts2022-05-17
Capital Review - Bringing the components of the capital review together
The Financial Policy team recommends that the Financial System Oversight Committee agree in-principle to key denominator framework decisions for the Capital Review, including dual reporting, floors, and removing internal operational risk modeling. These decisions are required to provide clarity for an upcoming Quantitative Impact Study and to mitigate risks associated with opaque internal models while reducing regulatory complexity. The memorandum also outlines a conceptual approach for calibrating minimum capital requirements by balancing financial stability against economic costs, ultimately relying on political risk appetite to select the final CET1 target ratio.
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