Finance 360 | Vol 1 Vol 1 | Page 21
inter-alia, requires supplementing strong microprudential regulation through enhancement in quantity and quality of capital, raising of risk weight of instruments in the trading book, liquidity buffers, leverage ratio, etc.; and effective supervision with a macroprudential policy overlay. The instruments of tackling time dimension of systemic risk (procyclicality) relate to reduced procyclicality of the minimum capital requirement, capital conservation buffer, countercyclical capital requirement, countercyclical provisioning, compensation policies, higher provisioning and/ or risk weights for rapidly growing sectors, LTV ratios, direct controls on lending to specific sectors, capital surcharges for systemically important banks, liquidity requirements, limits on currency mismatches and loan to deposit ratios. Cross-sectional dimension of systemic risk is addressed by continuous monitoring of identified Systemically Important Financial Institutions (SIFIs) based on size, interconnectedness, substitutability and other critieria and calibrated prudential tools (capital, liquidity, leverage, etc.) for them. The poli ?H??[YH????[??? ? ?\??\?H ?\?? ][?YX?[?\?H[??\?YX\?\?\? ?[??\?H ][?[?[??X[[??] ][???[??H ?\?? ?Y ?Y?[ K ]ZX?? H[? ?]?]\?X?[^?[?? H?[?[??X[ ?\?[H[?^ ??[?? H ^ ^Y\? ? H ?\???????Q?\? \?X?[\? K??[?Q?\?
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