It is likely that with a more risk-sensitive approach to capital, banks will have to consider whether their current cushion of actual capital above regulatory minimums is still appropriate. On balance, the Federal Reserve believes that an appropriately conservative approach to capital adequacy serves the United States' interest in maintaining the safety, soundness, and resiliency of our banking system.
We think that it would be best practice for banks to establish the net present value of the alternative rescheduling approaches (much as US lenders are doing) and we want to see whether lenders are developing such best practice approaches. These various efforts are designed to encourage the development of a wider menu of rescheduling options to address the arrears problem.