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Rise of asset managers may create new risks- BIS report

Jun 30 2014, 14:14 IST
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SummaryThe global forum for central banks said in its annual report on Sunday that the financial system is at a crossroads.

to more than half of the sovereign debt held by banks. The need to bail out several EU countries showed that sovereign debt can lose its value sharply.

The BIS also stops short of backing the calls from hawkish regulators in Britain and the United States who want radical changes to the models big banks use to assign risk weightings.

The report said models used by banks permit a "natural and welcome diversity of risk assessments among banks".

More objective measurement of underlying risks was needed, along with better supervisory safeguards on the use of models, the BIS report said.

Introducing a single regulatory model, such as a unique set of risk weights that all banks must use, could encourage risk concentration, the report added.

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