The treatment of intra-bank exposures may pose challenges especially in the emerging markets where banking systems rely markedly on the parent funding (intra-bank funding will be treated as funding from external third parties and their maturity will have to be extended – netting out at consolidated level is not allowed). Other question is the treatment of liquidity transfer restrictions. Excess liquidity in one entity would not be recognized when calculating the consolidated LCR if there is a reasonable doubt about the availability of such liquidity (due to ring-fencing measures, non-convertibility of domestic currency, foreign exchange controls etc. ).This may lead to fragmentation of the liquidity management, replication of the treasury operations at decentralized level with cost implications. The growth impact of the regulatory changes is of large importance for the emerging markets, as they aim towards financial inclusion, development of financial markets, long-term sustainable growth and real convergence to the more AE’s. Two of the most important points which have been extensively discussed in the growth context are the regulatory impact on trade and long-term infrastructure finance. Trade finance has been considered as the most important facilitator of the trade flows in part of the emerging markets and hence as an important growth factor within this group of countries. Some of the estimates point to a figure of 80–90% of the world trade being reliant on some form of trade finance, like trade credits or insurance/guarantees.
For the emerging world, even more so amidst less developed capital markets, as an alternative source of growth funding. However, during the process of transition, given the still rather weak economic recovery, the reform may have some negative implications for the financial markets, credit activity and growth dynamics. The fact that these reforms were primarily tailored to the specifics of the more advanced economies (AE), where the financial crisis, originally rooted from points to a possibility of asymmetric effects for advanced and emerging economies (EE) during the transitional process. As EE’s and AE’s economies intrinsically differ in terms of the level of financial and economic development, it is to be expected for the financial regulatory reform to have asymmetric impact on both groups of countries. Possible, unintended adverse impact on emerging market might occur, both through the direct channel of transmission (via the direct implementation of the new regulation), but also through the indirect channel, as the foreign banks in the emerging market change their behavior in response to the new regulatory standards. The deleveraging process is one of the well known indirect impacts, with large consequences, particularly in the emerging Europe. As the international regulatory reform process is very complex, some of the measures have long sequencing of implementation, and for some of the reform areas there are more observations and analyses to be done to define the final contours of the new financial system, more precise assessment of the impact seems challenging.