Federal Reserve Board has proposed
a rule on single counterparty credit limits (SCCL) of large
banking organisations. While the rule broadly follows the Basel
Committee's international large exposure framework, there are
key differences within the text.
The latest proposals take aim at large credit exposures,
particularly between larger and systemically important
Those exposures, in times of distress, can undermine
financial stability by linking the fate of a struggling bank to
otherwise healthy banks. The Fed’s report,
Calibrating the Single-Counterparty Credit Limit between
Systemically Important Financial Institutions, was released
on March 4.
"We are determined to do as much as we can to reduce or
eliminate the threat that trouble at one big bank will bring
down other big banks," said Federal Reserve Board chair Janet
Yellen at the report’s launch.
Debevoise & Plimpton The proposed rule, which
would constitute Dodd-Frank implementation, broadly...