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Who Supervises Whom? Who Pays What?

Who Supervises Whom? Who Pays What?. Boštjan Jazbec Bank of Slovenia Dubrovnik, June 29, 2007 The views expressed herein are not necessarily those of the Bank of Slovenia. Evan, thank you . What is Financial Stability?. Many definitions (talk to David, Gerard, Lars,...).

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Who Supervises Whom? Who Pays What?

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  1. Who Supervises Whom? Who Pays What? Boštjan Jazbec Bank of Slovenia Dubrovnik, June 29, 2007 The views expressed herein are not necessarily those of the Bank of Slovenia.

  2. Evan, thank you.

  3. What is Financial Stability? Many definitions (talk to David, Gerard, Lars,...). To have a good time while it lasts.

  4. Cost of Financial Instability Source: Wuerz (2005), Honohan and Klingebiel (2000)

  5. Is there any problem with rapid credit growth in CEECs?

  6. Growth Performance Source: Schadler (2006)

  7. Balance of Payments Source: Schadler (2006)

  8. Mostly Private Debt Source: Schadler (2006)

  9. Bank Credit Domination Source: Schadler (2006)

  10. Challenges for Financial Stability? Household Financial Leverage (In percent) Hungary Poland Czech Republic Turkey Source: Schadler (2006)

  11. Reasons for Banking Regulation • Role in allocation of ressources • Prevention of systemic risks • Externalities • Market failure/Asymetric Information • Moral Hazard • Lemon Problem • Regulatory Arbitrage • Reduction of potential „insurance“ obligation of the state Source: Mayes (2005)

  12. Banking Regulation and Central Banks Source: Wuerz (2005)

  13. Home vs. Host Host country problem – bank is of systemic importance,when it is not so in the home country Home country problem – is there any?

  14. Supervision The main debate is over the role of home country as leadconsolidating supervisor. Should that be so? Europe not yet ready for a ‘federal level’ player.

  15. Home:Host = 1:0

  16. Deposit Insurance Scheme Those who supervise should also bear costs of deposit insurance scheme. 'We should all be on the same boat to Split'.

  17. Conclusions Home country control Deposit insurance European agency

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