The Bank for International Settlements’ Financial Stability Institute published a comparative review of simplified regulatory regimes for small banks in Brazil, China, the European Union, Switzerland, the United Kingdom and the United States. Asset size is the only eligibility criterion common to all six, while some regimes also use measures of operational and cross-border complexity, financial resilience and supervisory assessments. The paper concludes that eligibility criteria should reflect banks’ size, complexity and risk profile and be supported by transitional arrangements to limit frequent movement into and out of simplified regimes. Approaches to prudential simplification vary substantially. Switzerland and the United States replace risk-based capital requirements with leverage ratios of at least 8%, while China and the UK retain risk-based requirements with targeted simplifications and compensating capital measures. The EU focuses primarily on streamlined reporting and disclosures, and Brazil makes more limited prudential adjustments. Liquidity treatment ranges from simplified ratios or proxies to exemptions, while reporting and Pillar 3 disclosures are widely reduced. The paper recommends aligning each simplification with safeguards, such as trading book limits when market risk capital is removed or liquidity risk criteria when Liquidity Coverage Ratio or Net Stable Funding Ratio requirements are waived.
2026-09-03Bank for International Settlements
Bank for International Settlements reviews six small bank regimes and links regulatory simplification to stronger safeguards
The Bank for International Settlements’ Financial Stability Institute reviewed simplified small bank regimes in six jurisdictions, finding wide variation in eligibility, capital and liquidity treatment. It recommends defining eligible banks by size, complexity and risk profile and matching each regulatory simplification with safeguards that preserve resilience.