It will simplify prudential regulations, increase intermediaries’ freedom of action and enhance the flexibility of the banking system. The key criterion is the evaluation of the different forms of risk using common quantitative methods, together with a more accurate correlation between capital requirements and the size of the risks faced.
The new rules for assessing the capital and organizational adequacy of banks are based on their own methodologies. The Bank of Italy’s task is to verify the reliability and rigour of the methods used and, if necessary, to require corrections and improvements. There will be a more intense interaction between the supervisory authority and the banks, but the regulatory formalities will be reduced.