Central Supervisors Research Articles

Stress Testing: A Measure of Financial Stability across ASEAN-5

A banking operation is at the epicenter of financial intermediation, and there is no perfect substitute for it in capital markets. Because a banking operation revolves around a constant inventory of risks, in the event of a financial or economic crisis, banks therefore get hit as the first line of defense, and then the broader economic activity is adversely affected if the financial turmoil exacerbates. Today, all central banks of ASEAN-5 design and conduct own micro and macro stress tests as a measure of financial stability. The main results of all three stress scenarios (i.e. baseline, adverse, and severely adverse) are not only informative to central banks and regulatory supervisors, but they contribute positively to the policy decision-making process; stress testing results also help bank executives (and risk managers) better manage risks, and academia for research. Stress testing is overly misunderstood and often confused with macroeconomic forecasting and early-warning indicator. Stress testing is not a standalone tool and it does not supplant other tools in the central bank’s arsenal; quite the opposite, stress testing is indispensable when complemented by another analytical method, model, or technique such as value-at-risk (VaR). Even though the five founding members of ASEAN-5 have made remarkable strides since the late 1990s in bringing their respective domestic banking sectors in line with the international standards (i.e. Basel III), they must continue with introducing more structural reforms and stay away from instability-inflicting policies.

Central banks and supervisors can contribute to an improvement of the pricing mechanisms for climate-related risks

Central banks and supervisors can contribute to an improvement of the pricing mechanisms for climate-related risks

Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory

The establishment of central environmental supervision system (CESS) and the departure audits of outgoing local government officials are major environmental initiatives established by the Chinese government during the 18th National Congress of the Communist Party of China in 2012. Their aim is to separate the different environmental responsibilities of the local and central governments. In just one year, central environmental supervisors inspected 30 provinces’ and cities’ environmental performance and punished many local officials for their failures to fulfil their environmental responsibility as part of a national pollution crackdown. Inspired by the significant and profound effects of the environmental audits, we construct a tripartite game model involving the central auditors, environmental whistle-blowers and local government officials. We show that local government officials are more likely to act responsibly and that auditors adopt more detailed auditing procedures due to the involvement of whistle-blowers. This suggests that the central environmental supervision system must be institutionalised, legalised, normalised and focus on protections for whistle-blowers. Environmental audits are useful for focusing on departing officials’ accountability for environmental protection. We urge the government to strengthen the transparency of audit and to distribute environmental audit information on social media.

How to Ensure Your Supervisory College Meeting Is an Abysmal Failure

This tongue-in-cheek short article is based on my conversations with central bankers and bank supervisors regarding the operation of supervisory colleges. The tone of the article was inspired by a “tongue in cheek” presentation by the Honorable William B. Traxler, Jr., judge on the 4th Circuit Court of Appeals, Richmond, Virginia, at a bar meeting in South Carolina in the late 1990s and more recently, by a dinner speech given by Norman T.L. Chan on Nov. 22, 2017, entitled “How to Get Rid of Banking Supervisors.” Mr. Chan indicated his motivation for the title of the speech was to attract “a few more senior bankers to help foot the dinner bill.”

Optimal Supervisory Architecture and Financial Integration in a Banking Union*

Both in the USA and in the Euro area, bank supervision is the joint responsibility of local and central supervisors. I study a model in which local supervisors do not internalize as many externalities as a central supervisor. Local supervisors are more lenient, but banks also have weaker incentives to hide information from them. These two forces can make a joint supervisory architecture optimal, with more weight put on centralized supervision when cross-border externalities are larger. Conversely, more centralized supervision endogenously encourages banks to integrate more cross-border. Due to this complementarity, the economy can be trapped in a suboptimal equilibrium with either too little or too much central supervision, when a superior equilibrium would be achievable.

Credit Cycles Revisited

Credit and business cycles play an important role in economic research, especially for central banks and supervisors. We reexamine a very useful dynamic model proposed by Kiyotaki and Moore (1997) of an economy with an endogenous credit limit. They claim that a small temporary shock generates large and persistent deviations from the steady state due to a positive feedback loop and the endogenous credit constraint. We mathematically show that contrary to common belief the model does not show amplification and persistence is visible only for a few parameter settings. Kiyotaki and Moore have linearized the model despite higher order terms being more important, rendering the Taylor expansion invalid. Further, we show that spillover effects in an economy with two distinct sectors are small. The strong amplification present in the original results, which supposedly is due to the large inter-temporal or dynamic multiplier effect, is spurious. The dynamic multiplier effect is of similar size than the static effect and in all cases numerically small.

The Basel Committee on Banking Supervision: a post-crisis assessment of governance and accountability

This paper focuses on the Basel Committee on Banking Supervision (BCBS), a transitional regulatory network that is widely perceived to be central to the system of global financial governance. The BCBS was established in 1974 as an informal group of central bankers and bank supervisors with the mandate to formulate supervisory standards and guidelines. Although the Committee does not have any formal supranational authority, it is the de facto global banking regulator and its recommendations have been widely implemented by member and non- member states.The paper investigates the BCBS governance and policies in the context of the recent global financial crisis to determine the extent to which it has been publicly accountable. This investigation will be guided by four normative questions: 1) How transparent is the BCBS? 2) How and by what means does the BCBS consult the public in its policymaking process? 3) How and by whomis the committee's performance monitored? 4) To what extent has the committee taken corrective measures to make the banking system more resilient against crises? The paper argues that the BCBS has gradually become a more accountable institution but that significant room stillexists for improvement. The paper will identify the most important gaps in BCBS accountability and spell out policy prescriptions for addressing them.

Przemiany polityczne na Islandii w warunkach kryzysu bankowego i gospodarczego

The author begins with a brief description of the essential political institutions of Iceland, as a republic with a parliamentary cabinet form of government and the special role of the president, arguing with the point of views that Iceland should be seen as a state with a semi-presidential form of government. Describing the political situation before the banking crisis, the author underlines the strong position of the Independence Party, which according to the results of the parliamentary elections (elections in 2007), plays a leading role in the "political life" of the state. The author pays attention to the process of oligarchisation in that party and the informal systems of social-network-based links and pathological links between the worlds of politics and business. Growing since the 90s, the dominance of a few family clans, together with the deregulation and privatization of the economy, led to nepotism and lack of accountability on the part of politicians and business representatives. An expansion of the three largest Icelandic banks Landsbanki, Kaupthing and Glitnir, without any significant criticism and state control, has led to a situation where at the end of 2008 their assets were 10-fold greater than the GDP of Iceland. Loss of confidence in the interbank markets after the collapse of Lehman Brothers in the U.S., caused inhibition of liquidity and consequently the collapse of these banks, eventually acquired by the state. The most spectacular was the collapse of Icesave - the Internet branch of Landsbanki operating in the UK and the Netherlands. The disintegration of the banking system led to a disintegration of the coalition government. Early elections in April 2009, won by the Social Democratic Alliance and the Left-Green Movement, led to the formation of a center-left government of Prime Minister, Ms J. Sigur?ardóttir. The first major action was the government's reorientation of foreign policy and submitting an application for EU membership, and the subsequent arrangement of the debts after the collapse of these banks, reform of the central bank and banking supervisors, the establishment of a parliamentary committee to investigate the banking crisis and identify those responsible, the appointment of a special Prosecutor investigating violations of law during privatization of the banking sector and the actions taken on the eve of the crisis. The article contains the constitutional and legal analysis of the first and second so-called referendum. on Icesave, conducted after the President vetoed a further act concerning Iceland's agreements with its creditors - the United Kingdom and the Netherlands. As a result, residents of Iceland have not agreed to repay debts incurred without any fault on their part and through arrogance, incompetence and greed of the financial elite and the political managers controlling the banking system. This puts into question the country's future membership in the EU. The government, despite the opposition to the proposal made by a vote of no confidence, which fell, still take the difficult decisions associated with the revitalization of the banking system and economy of Iceland and improve its international image.

The Basel Process, Financial Stability, and the Age of Turbulence

The Basel Process is a key element of the global financial system and a critical force that has been shaping the international financial architecture over the last 80 years. As such it plays an important role in co-ordinating the multilateral eorts of central banks, regulators, supervisors and market participants alike and is thus uniquely geared towards fostering and maintaining financial stability. Giving rise to current global financial turbulence, the recent subprime crisis has subjected the Basel Process to intense internal and external scrutiny. This episode of financial instability might yet prove be one of the most challenging tests for the Basel Process as authorities strive to improve their regulatory frameworks in search of incentives for prudent behaviour.

Housing Loans Growth, Foreign Currency Risk and Supervisory Response: The Polish Case

The spectacular growth of household loans in Poland and in other new member states, particularly in foreign currencies, has attracted particular attention of central banks and supervisors, because of its potential implications to the stability of the banking sector. In the paper, we assess the financial stability risks arising from these exposures using the micro-data form Polish households budget surveys. We define the financial-margin and stress-test every individual household against the financial shocks (interest rate and exchange rate shock) as well as shock on the labour market. We conclude that, in spite of rapid credit growth in the period of 1998-2006 and continuous easing of lending policies by the banks at least since 2003, the ability of the household sector to repay debts did not deteriorate. We find also that the financial margin (and thus ability to repay debt) is considerably higher among households repaying mortgage loans, however, at the same time, these households are much more vulnerable to financial shocks than other borrowers. We compare also the implications of different types of shock of the comparable magnitude and find that the impact of fx or interest shocks on the ability of households to repay debts is considerably lower than in the case of labour market shock, although among households that repay mortgage loans the differences between vulnerabilities to these shocks are much smaller. Using the survey data, we analyse also the implication of the new prudential regulations on bank’s behaviour and find evidence of regulatory arbitrage. We conclude that the credit risk rather than financial risks is a major indirect risk to the banking sector arising from exposures to household loans and possibly the next downturn in the credit cycle could be a challenging period for banks.

MPD BUKAN ADVOKAT PARA NOTARIS BERDASARKAN UNDANG-UNDANG NO.30 TAHUN 2004 TENTANG JABATAN NOTARIS

Notary is apublic official who runs most of the public functionsin the state, especially in the civil law. Notary has authority to make authentic certificate of all deeds, agreements, and regulations which is obligated by legislation or which is desired by an interested party, to be declared in the deed authentic, guaranteeing deed date, saving certificates, giving grosse, copies and citations of certificates, all along the deed is not assigned or excluded to the officer or other person which is specified by law.In the authority need to carry out surveillance and MPD is the only aut horized institution to implement surveillance, inspection and giving punishment toward notaries in the district/city. The institution exists of Region Supervisor Council and the Central Supervisors Council.MPD has a special authority which can be run to check notary relate to the investigators request, prosecutors or judges to take a photocopy minuta or other documents which is attached to the minuta or protocols in Notary storage, calling the Notary related to deed which has been made or notary protocols which are in Notary storage.Keywords: Notary, MPD, Lawyer

North Central Music Supervisors Conference

North Central Music Supervisors Conference

North Central Music Supervisors Conference

North Central Music Supervisors Conference

North Central Supervisors Conference

North Central Supervisors Conference