The Volcker Rule and its Consequences for the Financial and Banking System - Essay Example

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The Volcker Rule and its Consequences for the Financial and Banking System

Federal Reserve has publicly announced that the banking system of US does not need to accept and operate according to the rule before the month of July of 2014 but the banks will have to conduct the process of “good faith planning efforts” to get ready to accept the rule in the future and during the temporary phase. As banks and the financial system is still not aware of the bans that will be levied, there will be a cloud of uncertainty that these systems will experience for two years (Ciro 2012). These systems are experiencing ambiguity in understanding what does the Federal Reserve means by good faith planning efforts. The ambiguities are making condition worse thus decision makers should make the scenario clear and present the effects of the rule on US and other nations. The cloudy situation was made clear when a draft of the regulation was prepared and this draft consisted of details regarding the services offered by financial system and the way these services are used by the common public. The situation is still quite unclear for financial institutions as even the draft wasn’t clear enough to identify the effects that the rule will have on financial sector. ...Show more

Summary

The Volcker Rule and its Consequences for the Financial and Banking System Introduction The main purpose of Volcker Rule was to restrict banks from conducting risky activities which could possibly generate high amount of profits and losses (Liaw 2011)…
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