The amendments also authorise the Ministry of Finance to issue regulations on the use of other macroprudential instruments. Preferably, such instruments should focus directly on the sources of systemic risk. This is the principle that is applied when taxes are imposed directly on environmentally hazardous products. However, in practice, this is difficult to accomplish in the financial system. Systemic risk can be difficult to identify and has numerous sources. The financial system and its interaction with the real economy is complex, and problems spread across borders. The financial crisis was a clear reminder of this. We have experienced on previous occasions that some financial sector operators find ways to evade regulations. New sources and forms of systemic risk may also arise. It is difficult to imagine instruments that can fully prevent financial crises from developing. Yet it is still appropriate to increase banks’ resilience to losses when systemic risk increases. This is the primary purpose of the countercyclical capital buffer. Countercyclical capital buffer The new framework contains a number of new capital adequacy requirements. There are new buffer requirements in addition to the minimum Common Equity Tier 1 (CET1) capital  2  BIS central bankers’ speeches  ratio requirement. Banks that do not meet the buffer requirements will face restrictions on distributing dividend and paying out bonuses. The capital conservation buffer is permanent and independent of systemic risk. The systemic risk buffer is designed to act as a buffer against more persistent systemic risk and will apply to all Norwegian banks.
Libor: Entering the Endgame  Speech given by Andrew Bailey Governor of the Bank of England  Bloomberg Webinar, London and New York 13 July 2020  I am grateful to Alastair Hughes for his assistance in drafting these remarks and Paul Brione, Andrew Hauser, Thomas Horn, Will Parry and Edwin Schooling Latter for their input. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Introduction “‘The passing of summer,’ I thought. ‘There can be no summer in this land without cricket.’” So wrote the journalist and author Neville Cardus.1 Covid has deprived us of many aspects of our communal lives this year. It has meant no cricket for us until last week, and in the US still no baseball. And to prove that we share an obsession with summer pastimes, a former colleague from many years ago when I was seconded to the New York Fed gave me a book to read called ‘How Life Imitates the World Series’. Sadly, my speech cannot match that for importance. But a more recent summer tradition has been speaking on Libor, a now annual event for the past few years – but one I do not expect to be a permanent fixture. The time is fast approaching to draw stumps on the Libor benchmark, or for those to whom cricket is a mystery – after all not everyone appreciates a sport that can last five days and still end in a draw – we will soon be at the bottom of the ninth for Libor.