scholarly journals Financial Stability Board: Mandate and Implementation of Its Systemic Risks Standards

2014 ◽  
Vol 2 (1) ◽  
pp. 82-102
Author(s):  
Rolf Weber ◽  
Dominic Staiger
Keyword(s):  
Financial Stability ◽  
Systemic Risks

Early Intervention

2016 ◽  
Author(s):  
Michael Schillig
Keyword(s):  
Early Intervention ◽  
Financial Institutions ◽  
Financial Stability ◽  
Corrective Action ◽  
Viable Alternative ◽  
Prompt Corrective Action ◽  
Systemic Risks ◽  
The Us ◽  
The Uk ◽  
The Impact

The Financial Stability Board recommended that all national supervisors should have the mandate and powers to identify risks and intervene early in order to prevent unsound practices and take appropriate measures to reduce the impact of potential stresses on financial institutions and to safeguard against systemic risks. Accordingly, the BRRD and SRM contain new powers for the competent authorities to intervene early before an institution’s financial and economic situation has deteriorated to a point where resolution is the only viable alternative. The chapter starts with some theoretical reflections, focusing on the incentives of the actors involved. It then discusses the early intervention framework under BRRD and SRM and national transposition in the UK and Germany. It also covers the US prompt corrective action framework and early remediation under Dodd–Frank.

scholarly journals Financial Stability Indicators – The Case of Croatia

2016 ◽  
Vol 5 (1) ◽  
pp. 113-140 ◽  
Author(s):  
Mirna Dumičić
Keyword(s):  
Principal Component Analysis ◽  
Systemic Risk ◽  
Financial Stability ◽  
Principal Component ◽  
Small Open Economies ◽  
Macroprudential Policy ◽  
Policy Makers ◽  
The Public ◽  
Systemic Risks ◽  
Accumulation Index

Abstract This paper considers financial stability through the processes of accumulation and materialisation of systemic risks. To this end, the method of principal component analysis on the example of Croatia has been used to construct two composite indicators – a systemic risk accumulation index and an index reflecting the consequences of systemic risk materialisation. In the construction of the indices, the features and risks specific to small open economies were considered. Such an approach to systemic risk analysis facilitates the monitoring and understanding of the degree of financial stability and communication of macroprudential policy makers with the public.

EU Law (MiFID II) and effective regulation: a step towards financial stability?

2019 ◽  
Vol 26 (6) ◽  
pp. 833-848
Author(s):  
Mariia Domina Repiquet
Keyword(s):  
Financial Markets ◽  
Financial Stability ◽  
Financial Regulation ◽  
Duty Of Care ◽  
Eu Law ◽  
Systemic Risks ◽  
Two Sides ◽  
The Eu

This article examines to what extent EU law is effective in preserving global financial stability and, therefore, preventing financial crisis. A difference between macro- and micro-approaches to financial regulation is explained. Whilst the former is concerned with the minimization of systemic risks and maintaining of the financial stability, the latter is focused on the effective regulation of all financial markets’ players, whatever the size of their portfolios. These approaches are the two sides of the same coin, that is limiting the possibility that future financial crises will occur. This paper argues that the effective regulation of investment firms, especially their duty of care, helps to preserve overall financial stability. The choice of the MiFID II as a case study is explained by its appreciation as one of the biggest achievements of EU policymakers in the context of financial law so far. How does a duty to ‘know your customer’ affect global financial stability within the EU? What is the role of soft law in preserving the financial system? These are the questions that this paper seeks to answer.

Gulf Cooperation Council (GCC)—Oil Prices, Financial Stability, and the Use of Countercyclical Macroprudential Policies in the GCC

Policy Papers ◽  
2015 ◽  
Vol 15 (62) ◽  
Author(s):  
Keyword(s):  
Financial Services ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Oil Price ◽  
Loan Loss ◽  
Financial Cycle ◽  
Macroprudential Policies ◽  
Systemic Risks ◽  
Wide Range

Economic and financial developments in the GCC economies are interwoven with oil price movements. GCC economies are highly dependent on oil and gas exports. Oil price upturns lead to higher oil revenues, stronger fiscal and external positions, and higher government spending. This boosts corporate profitability and equity prices and strengthens bank balance sheets, but can also lead to the buildup of systemic vulnerabilities in the financial sector. Banks in the GCC are well-capitalized, liquid, and profitable at present, and well-positioned to manage structural systemic risks. However, oil-macro-financial linkages mean that asset quality and liquidity in the financial system may deteriorate in a low oil price environment and financial sector stress may emerge. The scope for amplification of oil price shocks through the financial sector suggests a role for a countercyclical approach to macroprudential policies. Countercyclical macroprudential policy can prove useful to reduce the buildup of systemic risks in the financial sector during upswings, and to cushion against disruption to financial services during periods of financial sector stress. The GCC countries have considerable experience with implementing a wide range of macroprudential policies, but these policies have not generally been adjusted through the cycle. GCC central banks implemented several macroprudential measures before the global financial crisis and have continued to enhance their macroprudential frameworks and toolkits to limit systemic financial sector risks. Although there is some evidence of macroprudential tools being adjusted in a countercyclical way, most of the tools have not been adjusted over the financial cycle. Further enhancements to the GCC macroprudential framework are needed to support the countercyclical use of these policies. A comprehensive and established framework, supported by strong institutional capacity, is essential for countercyclical macroprudential policies. This framework should provide clear assignment of responsibilities and guidance on how policies will be implemented to maintain financial stability and manage systemic risks over the financial cycle. Addressing data gaps and the further development of reliable early warning indicators in signaling potential systemic stress are needed to help guide the countercyclical use of a broad set of macroprudential policies. Expanding the countercyclical policy toolkit and its coverage can help address emerging financial sector risks. The implementation of countercyclical capital buffers and dynamic loan loss provisions could boost resilience in line with systemic risks faced in GCC economies. At the same time, using existing macroprudential policies countercyclically would prove useful to address emerging financial sector risks in a more targeted way. Expanding the coverage of macroprudential tools to nonbanks can help boost effectiveness by reducing leakages.

scholarly journals Importance of Macroprudential Policy Implementation for Safeguarding Financial Stability

2016 ◽  
Vol 5 (3) ◽  
pp. 79-98 ◽  
Author(s):  
Milena Vučinić
Keyword(s):  
Policy Implementation ◽  
Financial Stability ◽  
Financial System ◽  
Precise Determination ◽  
Institutional Framework ◽  
System Stability ◽  
Economic Policies ◽  
Macroprudential Policy ◽  
Systemic Risks ◽  
Potential Risks

Abstract The crisis pointed to the necessity for strong and stable financial system resistant to potential risks and shocks. Macroprudential policy is used to identify, monitor and asses systemic risks to financial stability. Therefore, it is very important to create effective and efficient macroprudential policy. To achieve this, it is crucial to create a strong institutional framework. This paper deals with the importance of macroprudential policy for financial system stability. The first part of the paper explains the macroprudential policy and its connection with other economic policies. The second part refers to the necessity of building strong institutional framework and the importance of providing clear responsibilities for macroprudential policy, as long as precise determination of responsibilities is very suggested and important for further functioning and policy implementation. Responsibilities for macro-prudential policy and macroprudential supervision defers among countries.

scholarly journals Fintech and Payments Regulation

2020 ◽  
Vol 20 (75) ◽  
Author(s):  
Tanai Khiaonarong ◽  
Terry Goh
Keyword(s):  
Financial Stability ◽  
Analytical Framework ◽  
International Standards ◽  
Regulatory Requirements ◽  
Regulatory Frameworks ◽  
Structure Changes ◽  
Systemic Risks ◽  
Recent Developments ◽  
Legal Foundations ◽  
Financial Technology

Financial technology (Fintech) has prompted authorities to consider their potential financial stability benefits, risks, and effective regulation. Recent developments suggest that regulatory approaches and their legal foundations need to augment entity-based regulation with increasing focus on activities and risks as market structure changes. This paper draws on recent international experiences in modernizing legal and regulatory frameworks for payment services. An analytical framework based on a four-step process is proposed—(i) identifying payment activities; (ii) licensing entities and designating systems; (iii) analyzing and managing risks, and (iv) promoting legal certainty. As payment activities evolve and potential systemic risks heighten, adherence to international standards and additional regulatory requirements should be warranted.

scholarly journals РЕГУЛЮВАННЯ ДІЯЛЬНОСТІ БАНКІВСЬКОГО СЕКТОРА У КОНТЕКСТІ ЗАБЕЗПЕЧЕННЯ ЙОГО ЕКОНОМІЧНОЇ БЕЗПЕКИ

2020 ◽  
pp. 91-98
Author(s):  
Плукар Л.А.
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Banking Regulation ◽  
Economic Security ◽  
State Regulation ◽  
Crisis Prevention ◽  
Regulation And Supervision ◽  
Systemic Risks ◽  
National Banking System

The article substantiates the need to regulate the banking sector to ensure economic security of its operation. The main tasks of state regulation and supervision of the banking sector have been identified. The types of existing models of the institutional structure of the system of banking regulation and distribution of powers between prudential supervisors are revealed. Requirements for the development of a model of regulatory policy in the banking sector of Ukraine have been formed. The necessity of creating early crisis prevention systems (macroeconomic, based on warning indicators), monitoring of systemic financial institutions, application of macroprudential analysis with regular publication of a strategic document - the Financial Stability Report. The foreign experience of macroprudential regulation and supervision with the help of established specialized divisions of central banks on financial stability and security is reflected. The creation of a separate unit of financial stability and security in Ukraine was initiated, reporting directly to the Chairman of the NBU. The scheme of correlation of subjects of management and tools of maintenance of economic safety of national banking system with separation of subjects of management of economic safety of banking sector, tools of maintenance of economic safety of banking sector at the international and national levels of banking supervision is developed. The implementation of the principles of the Basel Accords in the activity of the banking system of Ukraine is determined as a determining factor in strengthening its financial stability and economic security. The issue of trust in the banking system is one of the main criteria for success, efficiency and security of the banking sector of the economy of each state. The need for monitoring and management of systemic risks has been proved.

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.

Alternative Views on the Participation of Non-Euro Zone Countries at the Bank Union

2017 ◽  
Vol 62 (1) ◽  
pp. 3-19
Author(s):  
Liliana Donath ◽  
Veronica Mihutescu Cerna
Keyword(s):  
Financial Stability ◽  
Decision Makers ◽  
Eastern European ◽  
The European Union ◽  
Macroprudential Policies ◽  
Catching Up ◽  
Systemic Risks ◽  
The Reformation ◽  
Monetary Authorities ◽  
Eastern European Countries

Abstract The reformation of the bank systems’ regulation and supervision in The European Union was founded on a macroprudential approach to monitor systemic risks and the vulnerabilities in a more effective way. Considered as the backbone of the new macroprudential supervision architecture, the Bank Union raises intense debates among the catching up economies. The fact that there are few studies on the costs and benefits of joining the Bank Union for the Central and Eastern European countries, explains the different views of the decision makers concerning this issue. The study stresses the manner in which macroprudential policies were implemented in Romania, as a particular case among the CEE countries, and the extent of their contribution to mitigating vulnerabilities and maintaining financial stability. The paper summarises the main arguments in favour of joining the Bank Union by emphasising the Romanian monetary authorities’ stance compared to those of the neighbouring CEE countries.

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