CVA: the first sign of BCBS strategic change?
Journal of Financial Regulation and Compliance
ISSN: 1358-1988
Article publication date: 13 July 2015
Abstract
Purpose
The purpose of this paper is to aid understanding of the changes in Basel Committee on Banking Supervision (BCBS) regulatory strategies after the global financial crisis.
Design/methodology/approach
The author uses the credit valuation adjustment (CVA) charge reform as a test case for inquiring whether BCBS has departed from its pre-crisis facilitative regulatory strategy path. The regulatory strategy of the CVA charge is discussed.
Findings
The charge exhibits a new regulatory strategy that BCBS has adopted. It seeks to manipulate market structures by imposing risk-insensitive capital charge methodologies.
Originality/value
The paper offers a new heuristic to analyse regulatory initiatives and their significance. The CVA charge has not been subject to a regulatory theory-based analysis in prior literature.
Keywords
Acknowledgements
The article was written while the author was a member in and later the leader of How to rule the economy, a research project funded by the Academy of Finland.
Citation
Viljanen, M.V.-P. (2015), "CVA: the first sign of BCBS strategic change?", Journal of Financial Regulation and Compliance, Vol. 23 No. 3, pp. 230-251. https://doi.org/10.1108/JFRC-05-2014-0021
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited