SYstemic Model of Banking Originated Losses

The SYMBOL model has proven to be flexible enough to assess the impact of various regulatory/policy initiatives in the realm of banking. In fact, once the model is run one can use the losses distributions (output of the standard model) to evaluate different what-if scenarios and different policy initiatives.

SYMBOL has been used in this way by the European Commission as a tool for ex-ante quantitative impact assessment of a number of legislative proposals and for the assessment of contingent liabilities linked to public support to the EU banking sector.

One typical case is the analysis on the effects on public finances of the bail-in Directive (Bank Recovery Resolution Directive, BBRD). This Directive (European Parliament and Council, 2014) introduces and defines the order of intervention of different safety-net tools which include (i) improved standards on minimum capital requirements and capital conservation buffer set up in the CRR/CRD IV package (ii) bail-in, (iii) Resolution Funds (RF), (iv) Deposit Guarantee Schemes (DGS).

In the latest years Symbol has been used in collaboration with Economic and Financial Affairs Directorate to analyse the stability of the EU 27 banking sector.