non-fund item

I would have liked to see a third element brought in, about capital funding.

In concrete terms, it involves introducing measures which should contribute to the greater financial stability of the banking sector, and to reducing the probability of another crisis, focusing on the following five areas: the quality of capital (increasing the quality of bank capital is undoubtedly desirable), stricter liquidity standards (the liquidity risk was shown to be significant during the crisis), countercyclical measures (the creation of additional banking capital in good times should limit excessive credit growth and consequent creation of price bubbles, such as, for example, in Spain), the introduction of a leverage ratio (this new indicator should contribute to the greater stability of banks, but it should include not only fina ...[+++]ncial items contained in the bank’s balance sheet, but also off-balance sheet items, such as derivatives and the contingent liabilities of the bank) and, last but not least, the creation of a central counterparty for the settlement of OTC transactions, particularly in relation to greater transparency in derivatives.

6. Notes the ESRB’s statement of views of 9 December 2011 containing its reservations as regards a financial indicator, in which it states that the scoreboard ‘should include short-term liabilities (the sum of liabilities maturing within one year) for the unconsolidated financial sector, net of bank deposits, as a share of total liabilities’ and that ‘this indicator should be preferred to indicators based on flow-of funds equity measures, such as leverage or gearing ratios, because since equity is estimated at market values it is very ...[+++] sensitive to movements of the stock market’; reminds the Commission that Article 4(5) of the MIP Regulation stipulates that ‘the work of the ESRB shall be taken into due consideration in the drafting of indicators relevant to financial market stability’;

Recast of Capital Requirements Directives (48/2006/EC and 49/2006/EC), in particular address weaknesses revealed by the financial crisis such as treatment of off-balance sheet items; transparency/valuation of complex financial products and capital charges for complex financial products; securitization; strengthen considerably internal risk management rules, liquidity risk management and introduce more sensible rules on concentration risk , definition of hybrid capital, treatment of commodity firms,