For they will help to raise the European economy’s growth potential, enhance its capacity to adapt to changing global conditions and structures and strengthen its resilience to shocks.
But prudential supervisors, including the Federal Reserve, must also review their existing policies and guidance to identify areas where changes could help firms strengthen their risk management – a process that is already under way. Two areas of focus in this review will be capital and liquidity, the principal buffers that firms have against unexpected shocks.