Microprudential regulation

Microprudential regulation or microprudential supervision is firm-level oversight or financial regulation by regulators of financial institutions, "ensuring the balance sheets of individual institutions are robust to shocks".[1]

Aims

The motivation for micro-prudential regulation is rooted in consumer protection: ensuring solvency of financial institutions strengthens consumer confidence in the individual firms and the financial system as a whole. In addition, if a large number of financial firms fail at the same time, this can disrupt the overall financial system. Therefore, micro-prudential regulation also reduces systemic risk.

Standards

Micro-prudential regulation involves enforcing standards, e.g. the Basel III global regulatory standards for bank capital adequacy, leverage ratios and liquidity.

gollark: That sort of thing directly led to WannaCry.
gollark: It really annoys me that countries' "security" agencies go around hoarding exploits in stuff.
gollark: Well, yes, because they wanted an anonymous network of some sort.
gollark: One would imagine they *run* a bunch of tor nodes.
gollark: Is it though? Is it really?

References
  1. Dr Alan Bollard, Bernard Hodgetts, and Mike Hannah. Where we are going with macro and micro-prudential policies in New Zealand? A speech delivered to the Basel III Conference in Sydney On 25 March 2011. "Archived copy". Archived from the original on 2013-08-11. Retrieved 2014-03-06.CS1 maint: archived copy as title (link)

See also


This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.