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Regulation of banks participating in ecosystems: market discussion outcomes

24 November 2021

Most experts and market participants principally supported the need for proactive regulation of risks associated with banks’ participation in ecosystems.

Also, they agreed with the idea of a flexible approach to limiting risks of investing in the so-called immobilised assets that have no repayment requirements and are liquid only to a limited extent. This follows from the Bank of Russia’s report on the outcomes of the discussion with market participants of the consultation paper published in June.

The discussion was joined by systemically important credit institutions, regional banks, banking associations, analysts and other experts. In this report, the Bank of Russia sums up the discussion, outlines its stance on the most significant suggestions and comments that were received.

The approaches were updated taking into account the outcomes of the discussion. They contain both economically justified relaxed requirements provided for in the original concept, and methodological amendments that will allow more accurate reflection of the risks under consideration in regulation.

The next step for the Bank of Russia will be to survey banks with a universal licence (this regulation will not cover banks with a basic licence) to fine-tune the parameters of a risk-sensitive limit. If this limit is exceeded, immobilised assets will need to be secured by banks’ capital to mitigate the risks for creditors and depositors. Also, the terms of a transitional period will be updated to allow the banks to prepare for the limit introduction.

Preview photo: Zerbor / Shutterstock / Fotodom