Precondition for a Successful Implementation of Supervisors' Primpt Corrective Action: Is There a Case for a Banking Standard in the EU?

Larry Wall and Maria Nieto

FMG Special Papers from Financial Markets Group

Abstract: Over the past years, several countries around the world have adopted a system of prudential prompt corrective action (PCA). the European Union countries are being encouraged to adopt PCA by policy analysts who explicitly call for its adoption. To date, most of the discussion on PCA has focussed on its overall merits. This paper focuses on the preconditions needed for the adoption of an effective PCA. These precondtions include conceptual elements such as a prudential supervisory focus on minimizing deposit insurance losses and mandating supervisory action as capital declines. These preconditions also include institutional aspects such as greater supervisory independence and authority, more effective resolution mechanisms and better methods of meauring capital.

Date: 2006-03
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Related works:
Working Paper: Preconditions for a successful implementation of supervisors' Prompt Corrective Action: Is there a case for a banking standard in the EU? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:fmg:fmgsps:sp165

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