The objective of the regulatory changes was clear: to achieve a more robust financial system capable of withstanding shocks. Of what type? Financial and economic. Prudential arguments dominate the new regulation. And periodic stress tests against potential shocks are the best test to verify it.
Higher capital levels of greater quality, together with new liquidity requirements: here you have the foundation of the new Basel III capital regulation. In principle, applicable from 2019 but which institutions have already adopted in practice. Transparency is mandatory. And the stress tests I referred to earlier are especially mandatory. In a complicated market environment, starting from enormous distrust toward the future profitability of the sector. The keys to the new regulation are resilience and solvency. But what about profitability?
Perhaps I am asking this question too early in the text.
