Disadvantages Of Single Rulebook

This necessitated the need for development of regulatory measures for the industry. Bank regulation is a legal structure by which all financial

1. a) A bank has risk-weighted assets of $175 and equity of $12.5. If regulators require a minimum risk-weighted capital ratio of 5% given the current level of equity, how many new assets with a 100% risk weight can the bank add? How many with a 50% risk weight? b) If the bank had 20% more equity, how many new assets with a 100% risk weight could the bank add? How many with a 50% risk weight? How does having more equity affect a bank's ability to grow? How is this growth affected by the riskiness of the bank's assets?

Accordingly, banking regulators assessed minimum values for each of these key measures. At 2007, “adequately capitalized” (i.e., minimum) levels were 4% for the Tier 1 capital ratio, 8% for the total capital ratio, and 3% for the leverage ratio; “well capitalized” levels were 6% for Tier 1 capital, 10% for total capital, and 5% for leverage. Well capitalized banks qualified for, among other things, lower premiums assessed by the Federal Deposit Insurance Corporation (FDIC). Undercapitalized banks (e.g., below the 8% minimum required total capital) received a warning from the FDIC; continued violation of capital requirements triggered further regulatory costs, including intervention or (in the extreme) takeover by government regulators.

Government departments are instrumental to a flourishing and secure economy. They are in place to serve their constituents and ought to keep that in mind. The Federal Deposit Insurance Corporation (FDIC) fits this well and is in place to ensure that bank users are protected in instances of economic downturn and that their money is insured. In this way, regulation is extremely necessary to ensure a stable economy in instances of financial instability. To completely understand the FDIC, it is important to understand why and how it was created, its history, major responsibilities and who the leaders are.

The Dodd-Frank Act promotes a more rigorous and comprehensive regulatory framework for financial system, which deeply affects the development of both US and global financial institutions.

The Bank’s Tier 1, Total capital, and Assets-to-Capital multiple ratios were 13.0%,16.0%, and 17.2%, respectively, on October 31, 2011, compared with 12.2%, 15.5%, and 17.5%, respectively, on October 31, 2010.(Refer to Appendix 2) These changes over the period were influenced by increases in Tier 1 capital and Risk Weighted Assets. Risk Weighted Assets

On 4th February 2013 the Financial Services (Banking Reform) Bill (the Bill) was introduced to Parliament. This Bill has sought to implement the ring-fencing proposals of the UK Independent Commission of Banking (ICB), which is also known as the Vickers report. The Bill also represents the UK’s response to wider international calls to structurally reform banks, such as the Liikanen reports’ proposals on reforming the structure of the EU banking sector .

The above study is quite relative to the question at hand. It looks intensely at the Financial Services Authority (FSA) in the UK as they look to move regulation from a rules based system to a more principles based one. The study also investigates the factors they believe necessary to make the implementation of this more principle based system

What is the meaning of financial regulation? Specifically, the financial regulation means there are sets of regulation or supervision, which let the financial organizations comply to requirements, restrictions formulated by government or any other institution. The aim for financial regulation is keep the integrity of financial system, and this objective composing four parts ,the first parts is the regulation should maintain the confidence in financial system, the second part is enhancing the stability of financial system ,the third part is it should protect the consumer rights and the last one is reduce or prevent the financial crime( Kushmeider, Rose Marie,2005).

The primary measure used by regulators and analysts to measure a bank’s capital strength is the Tier 1 capital ratio. Analyzing this ratio indicates the strength and the bank’s ability to

Regulations have binding legal force throughout every Member State and enter into force on a set date in all the Member States. Directives lay down certain results that must be achieved but each Member State is free to decide how to transpose directives into national laws. A directive is a legal act of the European Union, which requires member states to achieve a particular result without dictating the means of achieving that result. It can be distinguished from regulations which are self-executing and do not require any implementing measures.

Economic Capital (“EC”) has become a topic discussed at various industry conferences, received attention by regulators and rating agencies, and has shown up over the years in various other disciplines, in particular in the banking industry. While the topic is becoming more mainstream, a standard definition of EC is not readily available, as shown by the wide variety of responses to our Economic Capital Survey. While specific definitions vary, some common threads tie the various descriptions together: Sufficient surplus to cover adverse outcomes, A given level of risk tolerance, and A specified time horizon. An assortment of risks and various tolerance levels utilized by companies are listed in this document, based on the survey results. Although virtually all types of risks are mentioned, development work to date has been more focused on financial risks, and therefore the document primarily explores these in more detail. While Regulatory and Rating Agency Capital have fairly well defined uses (i.e., determining solvency and creditworthiness of an organization), Economic Capital impacts many company business management and decision-making processes. EC can also have quite a few macro applications within a company. For example, a company can be

Single Regulators: are entities empowered by the governments of a country to regulate the entire financial system framework of a country by itself. Some of the countries which follow single regulatory system are:     Financial Services Agency (FSA), Japan Federal Financial Supervisory Authority (BaFin), Germany Autorité des marchés financiers (France) (AMF), France Monetary Authority of Singapore (MAS), Singapore

Basel Capital accord is a capital adequacy framework developed by the Basel committee. In 1988, the Basel Committee decided to introduce a capital measurement system commonly referred to as the Basel Capital Accord. This system provided for the implementation of a credit risk measurement framework with a minimum capital requirement of 8% on banks Risk Weighted Assets (RWA). The 1988 framework is also known as "Basel – I". Since 1988, this framework has been progressively introduced not only in member countries but also virtually in all other countries.

The Basel committee on banking supervision (BCBS) in 1998 published a set of minimum capital requirement for banks. It focused entirely on credit risk or default risk, these were known as Basel 1. Basel 1 defined capital requirement and structure of risk weights for banks. Under Basel1 assets of banks were classified in five categories according to credit risk carrying risk weights of 0, 10, 20, 50, and 100 percent and no