Post-crisis evolution of the banking sector

BIS Annual Economic Report  | 
24 June 2012

Banks and prudential authorities still face tough challenges in securing financial stability. Banks need to further strengthen capital and liquidity positions to regain markets' confidence. To expedite this process, authorities should ensure that institutions recapitalise and recognise losses on problematic investments. Authorities everywhere must complete their consistent and timely implementation of the agreed Basel III standards and ensure that robust regulation extends to currently unregulated intermediaries. Meanwhile, regulators in rapidly growing economies should be aware of the potentially destabilising risk-taking encouraged by buoyant local markets. The long-term objective of policy must be to pave the way to a robust business model of banking featuring strong and transparent balance sheets, self-sustaining international operations, and stable profits that do not rely on official support.