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Global Financial Development Report 2019 / 2020: Bank Regulation and Supervision a Decade after the Global Financial Crisis

Main Messages

  • Developing countries have increased their minimum capital requirements to help curb risks, but greater information disclosure and supervisory capacity are needed.
  • Effective regulation and supervision need to harness the power of market discipline to curb excessive risk-taking by private parties.
  • Bank regulations need to be compatible with incentives, but designing and enforcing such regulations are complex tasks.
  • Less complex regulations may mean more effective enforcement by supervisors and better monitoring by stakeholders.
  • Globalization and technological change are important trends that make it even more challenging to provide effective oversight of banks.

In Depth

  • GFDR 2020 Fact 1

    A majority of financial sector practitioners surveyed in a global poll believe that post-crisis financial regulation has led to an increase in regulatory arbitrage.

  • GFDR 2020 Fact 2

    Approximately 2 in 3 low-income countries have explicit deposit insurance.

  • GFDR 2020 Fact 3

    Banking reforms have led to increased regulatory capital (capital to risk-weighted assets), especially in high-income countries.

  • GFDR 2020 Fact 4

    Banks have increased their regulatory capital ratios partly by shifting toward lower risk-weighted assets.

  • GFDR 2020 Fact 5

    Many developing countries still use the simple standardized approach to computing risk weights.

  • GFDR 2020 Fact 8

    Systemically Important Banks are subject to new resolution rules

    SIBs are required to hold more capital and bail-in debt. New rules for resolution and orderly liquidation have yet to be tested.

  • GFDR 2020 Fact 7

    Few Basel III countries had implemented a leverage ratio requirement as of 2016

  • GFDR-2020-Fact-6.png

    High-quality capital can help cushion banks during times of crisis