In combination with the recent broad-based falls in commodity prices, these measures should help to restore confidence. In the view of the Governing Council, a number of the downside risks to economic activity identified earlier have materialised, particularly those stemming from the financial market tensions.
Such an approach is relatively new in comparison with the measures developed so far at the international level (e.g. deferral arrangements, clawback/malus provisions), which essentially seek to align individual incentives with those of the institutions’ shareholders. The BCBS proposal 13 will introduce a framework that will give supervisors stronger tools to promote capital conservation in the banking sector with payout restrictions.