Q&A: Finansinspektionen's Uldis Cerps on capital floors and too-big-to-fail
It will be difficult for regulators to calibrate a proposed new system of capital floors: too high, and banks may be encouraged to take more risk; too low, and they may fly into trouble. Uldis Cerps, executive director of banking at Sweden’s Finansinspektionen, talks about the need for balance
At first glance, Swedish bank supervision in the post-crisis years might appear contradictory – the country's central bank and its prudential supervisor, Finansinspektionen, have sought to control mortgage risk through a variety of mechanical means, sidelining banks' risk-weighted asset (RWA) calculations. But the supervisor has also consistently spoken up for risk-sensitive capital requirements
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