The second pillar, supervisory review, requires that banks enter into a dialogue with their supervisors on the methods and internal estimates, that they develop in order to determine how best to manage all their risks, including how much capital beyond the minimum requirement a firm should hold.
Indeed, in his presentation at our Domestic Financial Institutions Conference earlier this year, Sweden’s Deputy Central Bank Governor, Henry Ohlsson, discussed the merits of cash, citing both the need to protect the financially marginalised and the privacy that paying with cash affords. Deputy Governor Ohlsson is not alone recognising the benefits of cash even while supporting the development and adoption of electronic payments.