ABSTRACT
‘We will amend our regulatory systems to ensure authorities are able to identify and take account of macro-prudential risks across the financial system’: so read the G20 declaration on strengthening the financial system, in London on 2 April 2009. Five years later, bank regulators have agreed to demand more capital of a higher quality from banks, to add suspenders to the belt with a supplementary limit on bank leverage, and to imbed into the regulation measures to make capital requirements responsive to the financial cycle. They have, for the first time, agreed on liquidity standards, though these remain a work in progress. They have also sought to reduce systemic risk in the cross-section by requiring higher capital for big global banks and by centralizing heretofore bilateral derivatives dealing.
