Slide 8: The pillars of financial regulation Our regulatory framework should basically rest on 3 pillars, addressing capital, liquidity and resolution. The first pillar should ensure a solid, true and fair capital adequacy position – based on the actual risk exposure of the bank. Second, we need requirements to ensure healthy liquidity management and stable financing, as included in recent Basel reforms.
Last but not least, we need a credible resolution regime. In our European case we need a strict implementation of the EU directive on Banking Recovery and Resolution. This includes setting minimum requirements for own funds and eligible liabilities to be used in the resolution of a bank in troubles. It also includes formulating credible resolution plans for credit institutions.