This SDN takes stock of the current debate on the capital regulation of banks. The focus will be on the level of capital (other aspects such as contingent capital and the quality of capital have been covered in previous SDNs). It analyzes the pros and cons of higher capital requirements, and will conduct analyses to support the case for higher capital requirements, while highlighting areas where more work is needed to get more granular policy advice.

This note outlines the basic economics of the shadow banking system, highlights (systemic) risks related to it, and suggests implications for measurement and regulatory approaches.

The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or too big to fail subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the ...

This note overviews macroprudential policy options that have been proposed to address the systemic risks experienced during the recent financial crisis. It contributes to the policy debate by providing a taxonomy of macroprudential policies in terms of the specific negative externalities in the financial system that these policies are meant to address, and discusses their interrelations and some key implementation issues.