ABSTRACT
This chapter focuses on a Cost benefit analysis (CBA). The chapter evaluates whether the Bank Structural Regulation (BSR) strikes a balance between stability and efficiency. There are widespread concerns about the costs of a structural reform like the BSR. The basis for these concerns is the rationale behind the emergence and development of the universal banking model. Through the BSR, the main benefits of the structural reform are: significantly reducing the risks hidden in the current banking industry, reducing complexity, lessening interconnectedness, and enhancing the resolvability of banks. The intergroup relationship mainly concerns banks’ exposures to short-term wholesale and interbank funding. The BSR is definitely helpful in reducing interconnectedness through the ring-fence rule and using a system of intergroup limits. Compliance costs refer mainly to the fact that banking groups have an obligation to separate their capital to comply with regulatory requirements on a standalone basis.
