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Međunarodna regulacija u bankarstvu

TitleMeđunarodna regulacija u bankarstvu
Publication TypeBook
Year of Publication2012
AuthorsGanić, M
Pagination315
PublisherInternational University of Sarajevo
Place PublishedSarajevo, Bosnia and Herzegovina
ISBN Number978-9958-896-11-8
Call NumberCIP 339.732(075.8)
Other NumbersCOBISS.BH-ID 19357958
Abstract

At the international scene banking has become more dangerous than ever before, as well as activities to eliminate and minimize risk are present more than ever. Risk management is a hot topic in today's global environment. Globalization of banking business and bank cross-border mergers and acquisitions are forcing more and more monetary authorities to identify tools for effective risk monitoring. As banks play a dominant role in most financial systems, as the main source of financing and managing the system of payments, the financial crash would have significant repercussions on the national economy. Events on the occasion of the global financial crisis have shown that the specific cases of bankruptcy and moral hazard of sometimes famous banks are nowadays demanding systematic response of monetary authorities. Prudential regulation is one of the five foundations of the new action plan approved by the leaders of the G-20 in Washington in November 15, 2008 in order to prevent further deepening of the global financial crisis. But it was not only at the summit in Washington as well as those held later in London, Toronto and Pittsburgh where the main topic was the preservation of the global financial system and work on regulatory convergence in banking. Therefore, the task of this book is to bring as many lights in this extremely complex and very complicated matter.

The process of geographic expansion and consolidation of banking and other financial institutions has largely overcome national borders and takes global character. It may be said that what happened in field of finance in the last couple of decades represent the most significant progress in our epohe also very abundant in transformation, crises in the economic area, and all aspects of social reality. Some of these developments are not and should not go unnoticed. On the contrary, it set up and produce new challenges and tasks of the monetary authorities to address them through in order to successfully adapt to new circumstances.

In the first chapter of the book, entitled „Theory of financial (in) stability“, it is defined and analyzed the concept of financial stability, explaining briefly the role of monetary authorities in promoting financial stability and the role and importance of banks in the system of financial stability. Theoretical views and practical knowledge regarding financial stability proposes a more pragmatic approach in regulation of banking. The occurence of the crisis itself  manifest weakness in the financial markets. It is the object of this first chapter to explain why financial stability is important for global economy.

Financial and banking crisis is the title of the second chapter. In the second chapter  it is going to be explained the theoretical aspects and determinants of financial crises, especially in terms of failed risk management and the past experiences with financial crises, whether it is in developed countries or countries in transition. Banking crises often result in large economic losses and costs that are imposed by national governments and the economy in general. In this part of the book it is going to be provided with an overview of the global aspects of the financial and banking crisises and lessons learned through experience provides. It is also shown in this section how the banks and national regulators behave in a very dynamic and interactive process of globalization.

Third section, entitled „Prudential control and supervision“, reviewed in a very clear way the most important theoretical considerations of economic regulation of banks are exposed, concerning both in terms of market imperfections and the possibility of bankruptcy banking and financial institutions, and terms of taking measures to remedy market failures and resolving problems arising due to impact of external economic factors. Namely, given the complexity of the matter of bank regulation and reported the effects of greater uncertainty on the macro level this chapter gives a brief overview of Basel 2 (New Basel Accord).

As it is the control and risk management undoubtedly a hot topic for business and survival of banks, then the question of prudential regulation and supervision is unavoidable in this book.

As it was shown in the past few decades from lessons learned through experience vulnerabilities in the financial sector can no longer rely solely on quantitative indicators, but need to include qualitative indicators on the risk profile of individual institutions, combined with risk assessments of the financial sector as a whole. A new concept  in preventing the occurrence of another financial crisis was initiated by the IMF, together with other multilateral financial institutions. It is based on the practice of transparency and disclosure, the introduction of early warning systems, improving accounting practices and procedures, the use of stress tests as part of a dynamic approach to macroeconomic analysis. Also one discusses the major issues faced by the multinational financial institutions in setting standards in banking and finance.

The fourth chapter, entitled „International coordination and Basel Accords“ outlines the evolutionary path of introducing the detailed standards in banking in order to improve the regulatory environment for banking operations. We provide an overview of the theoretical frameworks starting from Basel 1 to Basel 3. No matter in what direction one may look, one should have in mind that Basel 1 setting formal regulatory capital requirements for banks that have become acceptable to regulatory agencies.

We especially recommend the Basel 2, which is the most detailed processed. In principle, its application has proven to be useful for banks and other stakeholders, in order to finally asses bank's capital requirement reflects the bank's specific risk profile. This is certainly evident improvement compared to Basel 1, which cannot be disputed. After all, when looking  at the overall context of Basel 2, it is evident that it had made some progress for achieving financial stability at least until the global financial crisis. Along with these changes banks are increasingly focusing on their internal risk management system and generally to learn about the risks they face.

Despite a pronounced tendency toward more stability of the banking sector, episodes of global financial crisis in 2007 showed its application have been limited. In fact, the capital adequacy regime expressed numerous weaknesses, especially during the global financial crisis. Bearing in mind the above noted deficiencies of Basel 2 and the problems with the global financial crisis in the last entire fourth chapter of this book one talks about Basel 3 and a comprehensive reform package for the purpose of safe and sound of banking operation.

The basic facts that one must bear in mind are that these national financial markets become increasingly integrated into one global system, while global banks have begun to use multiple distribution channels to reach customers, developing new products and risks are transferred into global markets. This chapter is opened with an overview of current trends in banking, its characteristics and implications. After introduction and overview of multinational banking in its historical development and then two very important points have been discussed in the section titled "Banking on the new millennium", a comprehensive profile of modern bank and a financial centre profile were presented.

In this chapter we have focused our attention on the activities that can be performed by universal banks and the structure of the concept of universal banks and then follows more detailed description of the concept of the universal banks in the U.S. and Germany. In parallel with the development of trends in banking in this chapter we analyze some characteristic features of these trends over the last decade especially the reduced importance of traditional banking activities.

In this respect the three sources of banks that have marked the last decade have been analysed:  wholesale money markets, then securitization assets that allowed banks to change their existing asset portfolio composition, as well as the emergence of a new banking model known as originate-to-distribute. Finally, in the lastpart of the chapter we draw out the implications in order that readers get familiar with the trends of consolidation in the banking industry, with the following sub-sections: the market for corporate control, theoretical explanations of mergers and acquisitions as well as development trends in European banking trends and M&A motivated in the EU.

In the sixth and final chapter of the book special attention has been given to the role and importance of national and international coordination in the field of banking supervision and promotion of comprehensive oversight of the banking sector.

Thus, it is given a general overview of the activities of supervision of banks and financial conglomerates in a changed financial environment especially in light of the efforts of monetary authorities to the imposition of internal discipline and dismantling a hazardous activity of banks. On the other hand, it provides an overview at the open practice of taking out the weaknesses and defects in a single cross-border banking supervision arrangements for dealing with large and complex EU banking groups. Another weakness in current procedures is the lack of standards and regulations of cross-border banks. Some important aspects of Capital requirements directive (CRD2) are also analysed and in this regard and the issue touches on the college supervisor, then the position of competent supervisors is carried out  in accordance with the beforementioned Directive.

Among other things, in this part of the book a few aspects of the dialogue the EU - U.S. regulation of financial conglomerates and the efforts of the two blocks have been illuminated to get more out of cross-border regulatory convergence among themselves. The objective needs of reconstruction Lamfalussijevog process in accordance with modern economic and technical needs have focused the leading bodies of the EU towards new solutions, integrated network of supervision in the EU are about to be disscused in the last section of this chapter.