scholarly journals Macroprudential Regulation in Ensuring of the Development of Financial Markets

2020 ◽  
Vol 22 (1) ◽  
pp. 24-30
Author(s):  
Victoria Kovalenko ◽  
◽  
Sergii Sheludko ◽  
Keyword(s):  
Financial Markets ◽  
Systemic Risk ◽  
Financial Stability ◽  
Banking Sector ◽  
Asset Markets ◽  
Price Stability ◽  
Shadow Banking ◽  
Credit System ◽  
Macroprudential Regulation ◽  
Goods And Services

Introduction. The study has confirmed that ensuring of financial markets’ development stability is connected with the development of an effective system for macroprudential regulation. The financial crisis has shown that price stability is not enough to ensure financial stability. The financial and business cycles are not synchronized – therefore risks can arise, especially during periods of “disconnection” between two cycles. Purpose. The aim of the paper is to systematize basic concepts of macroprudential regulation in financial markets, considering international practice of its instruments selection and usage. Results. It is clarified the approaches to a set of macroprudential instruments formation which depends on the country’s economic development and the vulnerability of a financial sector to internal and external shocks. It has been substantiated that monetary regulation is aimed at ensuring price stability in the market for goods and services. It has been proven that it should not be used to address hotbeds of volatility in asset markets. This is a subject for macroprudential regulation, aimed to ensuring the stability of financial markets and containing systemic risk. It has been identified the factors causing the need to implement the strategy of macroprudential regulation in financial markets to ensure their stable development. They include: systemic risk and financial cycles; considering the importance of a growing market’s credit system and measures to address its risks; the need to increase the transparency of the shadow banking sector; problems in regulating the FinTech branch; international financial standards; the growing role of the central periphery in international finance. Conclusions. It has been concluded that a powerful macroprudential political mandate and an adequate set of instruments should be given for central banks to solve the problem of increasing financial risks, especially in situations where monetary regulation is adaptive. It has been substantiated the conclusion about the need to develop supervisory and coordination mechanisms in the financial market and the introduction of end-to-end monitoring of systemic risks as a prerequisite for restoring financial stability.

scholarly journals Financial Markets: From the “Tragedy of Commons” to Balanced Regulation

2020 ◽  
Vol 15 (2) ◽  
pp. 173-190
Author(s):  
Anastasia Podrugina ◽  
◽  
Anton Tabakh ◽  
Keyword(s):  
Financial Markets ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial Regulation ◽  
Financial System ◽  
Political Influence ◽  
Regulation System ◽  
Shadow Banking ◽  
Financial Industry ◽  
Tax Legislation

Nowadays the global financial system faces a triple challenge: the threat of a new systemic financial crisis at both global and regional levels; difficulties of constant adaptation of existing financial business and regulatory practices to intensive technological innovations; direct and hidden consequences of excessive political influence on the financial system through sanctions and selectively applied practices for sanction purposes. Improving the quality of financial regulation will require deeper cooperation between regulators of leading economies and a proactive position of the financial industry, as well as the decentralization of financial regulation. However, it is unlikely that this will happen at the global level. Financial stability became a key goal of global financial regulation in the post-crisis period. We consider financial stability as the «tragedy of commons». The article describes the main trends of financial markets regulation after the crisis: transformation of global financial architecture, anti-money laundering and counter-terrorism financing practices (AML/ CT), financial sanctions. The article analyzes the existing failures of modern post-crisis financial regulation: credit crunch, reduction in the effectiveness of monetary policy, regulatory arbitrage, and increased compliance costs (AML/CT legislation, tax legislation, and the sanctions regime). In the future we expect simultaneous trends of harmonization and standardization of requirements in traditional sectors of financial markets (including traditional institutions of the shadow banking sector), but at the same time regulatory arbitrage1 will induce new financial technologies in order to reduce regulatory costs. The crisis triggered by the coronavirus pandemic in 2020 despite its non-financial nature will almost inevitably have a major impact on financial markets and their regulation. Possible steps to eliminate failures in the financial regulation system are proposed, including recommendations for international organizations.

Central bank digital currency: the future of institutional changes in the banking sector

2021 ◽  
Vol 2021 (2) ◽  
pp. 26-48
Author(s):  
Volodymyr MISHCHENKO ◽  
◽  
Svitlana NAUMENKOVA ◽  
Svitlana MISHCHENKO ◽  
◽  
...  
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Banking Sector ◽  
Central Banks ◽  
Credit System ◽  
Bank Supervision ◽  
Bank Of China ◽  
Digital Currency ◽  
Financial Monitoring ◽  
The Impact

The purpose of the article is to reveal the essence and features of the introduction of digital currency of central banks and their impact on the conditions of monetary policy, financial stability, as well as institutional transformations in the development of national banking systems. The study is based on an analysis of projects of issuance and use of digital currencies of the ECB and central banks of leading countries, as well as the results of pilot projects of the National Bank of China on the use of the digital yuan and NBU on the e-hryvnia circulation. It is proved that digital currency of the central bank should be considered as a new dematerialized form of national currency in addition to cash and non-cash forms. Particular attention is paid to the study of the impact of the use of digital currency by central banks on the main parameters of economic policy. The main directions of potential influence of digital currency use on transformation of mechanisms of realization of monetary, budgetary and tax, macroprudential policy, maintenance of financial stability, activization of action of channels of the monetary transmission mechanism, and also on reforming of system of the state financial monitoring and bank supervision are substantiated. It is determined that one of the consequences of the use of digital currency will be the ability to ensure full control over all monetary transactions, which will help reduce the shadow economy and corruption. Structural and logical schemes of centralized and decentralized models of issuance and circulation of digital currency of central bank have been developed, directions of changes in the structure and functions of commercial and central banks, as well as in the structure of the financial and credit system in general have been substantiated.

scholarly journals Determinants of Polish financial stability in 2017-2018

2019 ◽  
Vol 30 (2) ◽  
pp. 5-19
Author(s):  
Kinga Górska ◽  
Karolina Krzemińska
Keyword(s):  
Financial Markets ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial System ◽  
National Bank ◽  
The Stability

This article seeks to present the essentials of financial stability and to analyse and evaluate selected determinants of stability Poland’s financial system in the years 2017–2018. The study comprises exemplary ratios or indicators that are used in measuring the stability of a financial system. The proposed analysis is confined to selected groups of stability ratios/indicators that are pertinent to the macroeconomic situation, the situation in financial markets, and the situation of the banking sector. The analysis is based upon the data and statistics provided in the reports of the National Bank of Poland, available by 31st November 2018.

scholarly journals Economic Insecurity as Systemic Risk

2015 ◽  
Vol 62 (s1) ◽  
pp. 29-36
Author(s):  
Ion Pârţachi ◽  
Eugeniu Gârlă
Keyword(s):  
Systemic Risk ◽  
Economic Activity ◽  
Financial Stability ◽  
Banking Sector ◽  
Activity Index ◽  
Analytical Description ◽  
Economic Security ◽  
Economic Insecurity ◽  
Corporate Sector ◽  
New Approach

Abstract Difficulties related to the problem of evaluating the economic security / insecurity, including the threshold of economic security / insecurity, namely the impossibility of giving an analytical description of a criterion entirely made up of a set of indicators describing the degree of economic security / insecurity, makes more and more researchers, including the authors, to seek indirect ways of finding solutions, for example considering systemic risk., as a measure of evaluation. Thus, starting from a new approach, and given the specific components of systemic risk to financial stability: the banking sector, corporate sector, public sector, volume of credits, economic activity index the threshold vector of economic security / insecurity can be developed. The study shows that systemic risk can be used to measure the threshold of economic security /insecurity.

Commercial Banking and Shadow Banking

2019 ◽  
pp. 61-94
Author(s):  
Arnoud W. A. Boot ◽  
Anjan V. Thakor
Keyword(s):  
Financial Markets ◽  
Systemic Risk ◽  
Credit Rating ◽  
Financial Institution ◽  
Commercial Banking ◽  
Dark Side ◽  
Shadow Banking ◽  
Rating Agencies ◽  
P2p Lending ◽  
Consequent Increase

We review in this chapter the market developments related to the increasing blurring of the boundaries between banks and financial markets, and the literature associated with this. While traditionally viewed as competitors, institutions and markets are now viewed as engaging in three forms of interaction: competition, complementarity, and co-evolution. The blurring boundaries between banks and markets are evidenced by the growth in shadow banking and P2P lending. We discuss how this has led to economic gains as banks become increasingly dependent on and intertwined with markets. But we also point to a dark side of this intertwining, which is the consequent increase in systemic risk and financial institution fragility. The increased importance of “gatekeepers,” like credit rating agencies, and the implications of these developments for the regulation of banks and markets, are also discussed.

Lehren aus der Krise – Notwendige Änderungen der Finanzmarktregeln und zur Begrenzung systemischer Risiken

2009 ◽  
Vol 58 (3) ◽  
Author(s):  
Otmar Issing ◽  
Stephany Griffith-Jones ◽  
Stefano Pagliari ◽  
Claudia M. Buch ◽  
Katja Neugebauer
Keyword(s):  
Financial Crisis ◽  
Systemic Risk ◽  
Financial Stability ◽  
Market Failure ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Systemic Risks ◽  
State And Market ◽  
Bank For International Settlements ◽  
The International Monetary Fund

AbstractThe latest financial crisis has been caused by a mixture of state and market failure, argues Otmar Issing. To avoid future crises, more transparency is needed - not by gathering more information, but by gathering it systematically and thereby creating “intelligent transparency”. Furthermore, regulation has to be global, he states. The necessary institutions are in place: The International Monetary Fund, the Financial Stability Board and the Bank for International Settlements.Stephany Griffith-Jones and Stefano Pagliari point out, that containing “systemic risk” is one of the most important rationales for regulating financial markets. Our understanding of the sources of systemic risk has repeatedly been challenged by major episodes of financial instability. The crisis that started in the summer of 2007 has been no exception. They discuss how the latest global financial crisis urges analysts and regulators to rethink the origin of systemic risk beyond a narrow focus on the banking sector, beyond the “too big to fail problem”, and beyond a narrow micro-prudential focus. They focus on two regulatory principles: comprehensiveness and countercyclicality.Claudia Buch und Katja Neugebauer review the existing empirical evidence on whether the increase in cross-border activities has allowed banks to diversify risks and to what extent it has increased banks’ exposure to systemic risks.

Shadow banking's effects in the Chilean financial system

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Diana López Avilés ◽  
Paula Piñeira ◽  
Víctor Andrés Roco Cáceres ◽  
Felipe Vergara ◽  
Nicolas Araya
Keyword(s):  
Systemic Risk ◽  
Value At Risk ◽  
Financial Stability ◽  
Financial System ◽  
Conditional Value At Risk ◽  
Shadow Banking ◽  
Content Type ◽  
Relevant Effect ◽  
New Research ◽  
The Impact

PurposeThe Financial Stability Board (FSB) determined that entities classified as shadow banking are of a credit nature because they are capable of affecting the financial system through the entry and exit of capital. This study aims at measuring the impact of shadow banking in the systemic risk in Chile. A sample of 91 institutions (Run) belonging to the mutual funds was used, with a series showing a continuous behaviour between 2004 and 2018.Design/methodology/approachThe measurement is carried out using the conditional value at risk (CoVaR) methodology, which analyses the behaviour of an institution in a regular state against the same institution in a state of stress.FindingsThe results obtained reflect that liquidity mismatches do not have a relevant effect on the systemic risk, while the 2008 crisis does contribute to its decline.Originality/valueThere are less number of literature studies that apply statistical models regarding shadow banking, at least at a quantitative level, so this research is a beginning for other studies, supporting future authors in their new research as a basis.

scholarly journals Monetary Policy and Financial Stability

Policy Papers ◽  
2015 ◽  
Vol 2015 (45) ◽  
Author(s):  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Financial Crises ◽  
Financial Stability ◽  
Price Stability ◽  
Financial Risks ◽  
Macroprudential Regulation ◽  
Output Stability ◽  
Regulation And Supervision

The issue of using monetary policy for financial stability purposes is hotly contested. The crisis was a reminder that price stability is not sufficient for financial stability, financial crises are costly, and policy should aim to decrease the likelihood of crises, not only rely on dealing with their repercussions once they occur. It is clear that well-targeted prudential policies (including micro and macroprudential regulation and supervision) should be pursued actively to attenuate the buildup of financial risks. The question is whether monetary policy should be altered to contain financial stability risks. Should it lend a hand by temporarily raising interest rates more than warranted by price and output stability objectives? Keeping rates persistently higher is also possible, but more costly.

scholarly journals IMPACT OF SHADOW BANKING ACTIVITIES AS NON BANK INTERMEDIATION TOWARD REGULATORY DEVELOPMENTS IN FUNCTION CONTROL OF FINANCIAL SERVICES SECTOR IN INDONESIA

2016 ◽  
Vol 1 (1) ◽  
pp. 47
Author(s):  
Lastuti Abubakar ◽  
C. Sukmadilaga ◽  
Tri Handayani
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking Regulation ◽  
Shadow Banking ◽  
Services Sector ◽  
Financial Services Sector ◽  
Analytical Research ◽  
Global Financial System

Based on the Global Shadow Banking Monitory Report 2015 issued by the Financial Stability Board, global shadow banking activities manage 80% of global GDP and 90% of the global financial system assets. Hence, this study aimed to examine the regulation and supervision of shadow banking activities in Indonesia. The method used is normative juridical with descriptive analytical research specifications. Based on the research results as follows : regulation of shadow banking in Indonesia's financial services sector covers all financial institutions outside the banking sector or Non-Bank Financial Institutions that the regulations are scattered in various rules. Indonesia has developed an integrated surveillance system for the entire financial services sector, include NBFIs. Development of shadow banking regulation will be based on the strengthening of reporting, monitoring, supervision and regulation. Keywords : regulatory developments, shadow banking, and supervision

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