BIS’s Restoy warns against ‘supervisory straitjacket’
Rules-based frameworks for banking sector intervention may “unduly constrain” regulators
Regulators should be wary of rules-based approaches to banking sector intervention, as they may find themselves in a “supervisory straitjacket”, Fernando Restoy warned on September 12.
The head of the Bank for International Settlements’ Financial Stability Institute examined the US’s “prompt corrective action” (PCA) framework in remarks to a gathering of supervisors. The PCA regime contains capital triggers that require regulators to impose remedial measures.
Restoy cited a US report that
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