User:Marty Mayne/sandbox

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The wiki code for bold text is like this:

bold = bold

Creating a wikilink (that is, a link to another article on Wikipedia) looks like this:

bold = bold

On the English Wikipedia, that link to the article Bold will redirect you to w:en:Emphasis (typography). To link to an article with a different name than the text, put a | (a "pipe", inserted with shift + \ on most keyboards) in between the code and the word you want to appear on the page. Like this:

bold = bold (with the link to )

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Marty Mayne (talk) 13:37, 17 February 2021 (UTC) to sign + add timestamp

How to: Add a citation with WikiCode So, you have a solid paragraph drawn from a reliable source. How do you let other editors know where to look to verify your information?

First, if it's a new article, let's look at how to add a References section to the article using WikiCode.

You can access WikiCode through the "Edit source" option on the page.

Then, follow these instructions:

Check that the bottom of the page has a "Notes" or "References" section. If not, type: ==Notes== Check that the Notes section either has the text or. If not, type:. This determines where your references will appear on the page. Now click after the text you would like to create a reference for. Now type in the after your reference. Wiki software will automatically add your inline reference number.

= 3. Monitoring Mechanism = As part of the SSM, the ECB is, according to Regulation 287/74, Art. 4, in charge of :

-       Conducting supervisory reviews (Supervisory Review and Evaluation Process)

-       Assessing banks’ acquisition of qualifying holdings (Mergers and Acquisitions)

Supervisory Review and Evaluation Process
The Supervisory Review and Evaluation Process, also known as ‘SREP’, is a regular assessment of the risks linked to the banks. The SREP enables supervisors, under the Single Supervisory Mechanism, to take essential supervisory measures. The aim is to make sure that banks are still safe and reliable, and that any factors that could affect their capital and liquidity are under control. Today, the capital and liquidity levels of banks are directly subject to an ECB monitoring system while beforehand it was heterogeneously done at a national level.

The SREP uses a methodology based on four monitored areas : • Business Model - assessment of the bank’s strategy and its main activities; • Internal Governance - examining the organizational structure, including the management, and  the people and their functions; • Risks to capital - encompassing risks linked to credits, markets, interest rates, and operations; • Risks to liquidity - having sufficient cash for short-term needs.

In addition to these monitored areas, the European Central Bank is, under European Union law, obliged to perform each year at least one stress test on supervised banks. This test will be part of the annual SREP cycle. Stress tests are important computer-simulated techniques which evaluate the sustainability of banks under potential financial and economic shocks. The results of these tests give good insights to supervisors in order to write a report on the vulnerability of the bank and subsequently, list concrete measures to take.

The SREP is undertaken annually by supervisors from the ECB and Joint Supervisory Teams from national competent authorities. Annual SREP cycles are based on data from the previous year and  after each cycle, there is an individual evaluation. The evaluation is a report made by the supervisors with a score ranging from 1 (lower risk) to 4 (higher risks). Based on that, there will be a decision, that is, a list of actions that the supervised bank will have to follow. It can be quantitative capital measures, quantity liquidity measures, or other more qualitative supervisory measures. For example, the need of holding more capital especially in times of financial crisis or a change in the management structure. With the help of supervisors, those actions shall generally be done by the following year. In case of non-compliance with the requirements, the ECB can charge a fine up to the double of the profits (or losses) which have been generated (or caused by) the breach and that can amount up to 10 % of their annual turnover. Also, the ECB can request national authorities to open proceedings because of the breach of requirements. In worst cases, when a bank is failing or likely to fail, the second pillar of the European Banking Union, the Single Resolution Mechanism, enters into play. Eventually, even though the methodology and the timeframe are identical for banks, the actions to take can significantly differ among them as well as the sanctions.

Capital requirements
As banks take risks and that can result in losses, holding capital is essential to absorb those losses and avoid bankruptcies and additionally, ensure people’s deposits. The amount of capital required will be proportional to the risks the bank takes.

Since 2016, the ECB may impose additional capital requirements if the results of the SREP do not reflect a proper management or coverage of the risks. Thanks to the Basel Accords, there already exists a minimum capital requirement: 8% of banks’ risk-weighted assets for all banks, and this is the Pillar 1. Nevertheless, after Basel II, a Pillar 2 can be set to cover additional risks not covered by the Pillar 1. This Pillar 2 is divided in two. On the one hand, a Pillar 2 Requirement (P2R) for which requirements in terms of risk sensitivity and flexibility need to be fulfilled at all times by the bank and on the other hand, a Pillar 2 Guidance (P2G) in order to identify levels of capital to be maintained by the bank in the long run. In case of non-compliance with the Pillar 2, the Supervisory Authority will more closely monitor the risk of the bank, but it will not trigger an automatic supervisory action response. However, between the P2G and the P2R, three buffers can be found, two of them added by the Third Basel Accords.