A comparative review of worldwide on-site banking supervision trends through the lens of IMF/World Bank FSAP

Alessandro Santoni, Valentina Rapalino and Roberta Nesti

No 375, Occasional Paper Series from European Central Bank

Abstract: The IMF working paper, “Good Supervision: lessons from the field,” examines the effectiveness of On-site Inspections (OSIs) as a supervisory tool in advanced economies (AEs), drawing insights from 60 Basel Core Principles (BCPs) assessments conducted between 2012 and June 2023. Despite their critical role in ensuring financial stability, OSIs are identified as the second-largest weakness among supervisory techniques in AEs. The study highlights challenges such as limited supervisory resources, infrequent inspections of smaller banks, and an over-reliance on off-site monitoring, which cannot fully substitute the insights gained from in-person supervision. Key deficiencies include gaps in OSI scope, frequency, staffing, and enforcement mechanisms, as well as communication and structural issues. The paper underscores the need for supervisory authorities to balance on-site and off-site methods, enhance staffing and inspection practices, and strengthen enforcement capabilities. These improvements are deemed essential to align supervisory practices with BCP standards and foster a more resilient financial system. JEL Classification: G2, E58

Keywords: Basel Core Principle (BCP); International Monetary Fund (IMF); On-site Inspections (OSIs); supervisory techniques (search for similar items in EconPapers)
Date: 2025-10
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