Current topics in banking regulation and systemic risk: Bank resolution, regulatory arbitrage and climate risks

Abstract

This chapter examines the relationship between banking regulation, systemic risk, and emerging challenges such as bank resolution, regulatory arbitrage, and climate risk. The findings have significant implications for policymakers and regulators, highlighting the complexities and limitations of current resolution frameworks and climate risk regulation in managing systemic risk effectively. The chapter provides a comprehensive review of the literature on bank resolution, emphasizing its relevance to systemic risk. It explores the concept of regulatory arbitrage and its impact on systemic risk, emphasizing the need for coordinated regulatory efforts. Additionally, the chapter discusses the connection between banks’ ESG activities, particularly climate risk, and financial stability. Overall, this chapter contributes to understanding the intricate dynamics of banking regulation and its implications for systemic risk management, calling for enhanced regulatory measures to ensure financial stability.