Editorial Note
Objective of Banking Supervision
Association of Supervisors of Banks of the Americas
A revision of the objectives of the different banking supervision institutions of the region shows a wide variety of them that, from the perspective of the financial market customer, could lead to confusion in relation to the role of the banking supervisor and the public good it provides.
The different definitions of the role of the banking supervisor in the region include, among others, the protection of the consumer of financial services and the task to monitor that the supervised agencies comply with the established rules and enforce the strictest control of their operations and businesses.
The wide range of objectives does not promote a clear understanding of the role of the supervisor that, in public documents, include the protection of the resources of depositors, the maintenance of a stable financial system, the promotion of competitiveness in the banking system, the defense of the consumer rights vis-à-vis the financial intermediaries and even the avoidance of abuse, usury and the utilization of the funds of clients in benefit of the institutions of the financial system.
Therefore, it is not surprising that when problems arise in the financial system, legislators, citizens, enterprises and all of the institutions threatened by the negative effects of a potential financial crisis turn their attention to the banking supervisors and ask them to render report over their work.
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Bank
Supervision
 Is there any optimal way to structure supervision?
Speech by Mr. Stefan Ingves, Governor of the Sveriges Riksbank, at the Summit Meeting of the Islamic Financial Services Board, Dubai, 15 May 2007.
My presentation is about finding the best way of structuring the financial regulatory authorities in a country. First I will describe the alternatives for supervision that countries have chosen. Then I will discuss how certain key aspects of supervision, such as independence, accountability, transparency and efficiency can be accommodated under various supervisory structures. Third, I will debate the arguments for and against having supervision inside the Ministry or in a national central bank. I will also evaluate the arguments for and against combining various supervisory authorities.
 Banking Supervision: Quality and Governance
Marco Arnone, Salim M. Darbar, and Alessandro Gambini. IMF Working Paper.
This paper examines the relationship between the quality of banking supervision and governance of the supervisory agency, based on assessments of the Basel Core Principles and the IMF Code on Transparency in Financial Policies. We find a positive correlation between the transparency of the supervisor and the effectiveness of banking supervision; moreover, better accountability and integrity practices of the banking supervisors are associated with higher independence, which in turn is associated with better compliance of the Basel Core Principles.
Basel II and financial institution resilency
Remarks by Dr. Nout Wellink, President of the Netherlands Bank and Chairman of the Basel Committe on Banking Supervision, at the “Risk Capital 2007” conference, Paris, 27 June 2007.
Banks sometimes need to adjust to unexpected and unwanted shocks, though change also arise in a more positive way, such as innovation. I will focus on our changing financial landscape and how the work of the Basel Committee and, most notably, the Basel II framework helps firms and financial systems to become more resilient to these changes.
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Recommended
Readings
 The subprime mortgage market
Remarks by Mr. Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the Federal Reserve Bank of Chicago’s 43rd Annual Conference on Bank Structure and Competition, Chicago, 17 May 2007.
The recent sharp increase in subprime mortgage loan delinquencies and in the number of homes entering foreclosure raise important economic, social and regulatory issues. Why have delinquencies and initiations of foreclosure proceedings risen so sharply? How have subprime mortgages markets adjusted? How have Federal Reserve and other policymakers responded, and what additional actions might be considered?
 Highly leveraged institutions and financial stability – a case for regulation?
Address by Mr. Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Second Conference on Law and Economics of Risk in Finance, University of St. Gallen, St. Gallen, 29 June 2007.
Why is there such distrust on highly leverage institutions (HLI's)? Why is the risk they pose to financial stability perceived as being so high? HLIs account not only for a significant share of trading volume in some market segments, especially complex ones, they are also important counterparties and clients which provide significant source of revenue for large international banks. This raises the question of whether HLIs are indeed a threat to financial stability and, if so, whether there is a need for regulation.
 The role of federal banking agencies in strengthening federal financial consumer protection
Testimony of Mr. Randall Kroszner, Member of the Board of Governors of the US Federal Reserve System, before the Committee on Financial Services, US House of Representatives , Washington DC, 13 June 2007.
The Federal Reserve has the responsibility for implementing the laws designed to protect consumers in financial services transactions. Many of these laws are based on ensuring that consumers receive adequate information in the form of disclosures about features and risks of a particular product. However, even well-designed disclosures can only be useful if they can be understood by consumers who have the necessary financial knowledge. Accordingly, we must promote financial education.
The globalization of financial markets and financial regulation: implications for Latin America
Malcolm D. Knight, General Manager, Bank of International Settlements. Presentation to the Centro para la Estabilidad Financiera, Buenos Aires, 5 June 2007
I would like to spend a little time this morning talking about some of the changes in global financial markets that have taken place in recent years, including shifts in the geography of financial transactions, new financial instruments, changing roles for the different categories of participants in financial markets, and new patterns of correlation among financial assets prices. I will also talk about what all of this means for the process of regulatory cooperation in our globalised financial system. Top
ASBA
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