Good Supervision: Lessons from the Field

Tobias Adrian, Marina Moretti, Ana Carvalho, Hee Chon, Katharine Seal, Fabiana Melo and Jay Surti

No 2023/181, IMF Working Papers from International Monetary Fund

Abstract: Keeping banks safe and sound hinges on good supervision. The bank failures of March 2023 precipitated questions about the effectiveness of supervision. This paper reflects on lessons learned from this banking turmoil and reviews global progress in delivering effective supervision over the past ten years. It finds progress in areas like risk monitoring, stress testing, and business model analysis. Yet, progress has also been hampered by deficiencies in supervisory approaches, techniques, tools, and (use of) corrective and sanctioning powers, as well as by unclear mandates, inadequate powers, and lack of independence and resources. Overcoming these deficiencies requires supervisors to improve their own performance and other policy makers to contribute to ensuring vigilant, independent and accountable supervision.

Keywords: Banks; supervision; prudential standards; lack of independence; business model; risk profile; bank turbulence; courses of action; supervision framework; light touch supervision; bank turmoil; compliance departments; bank strategy; supervision process; Basel Core Principles; Bank supervision; Corporate governance; Stress testing; Financial sector stability; Global (search for similar items in EconPapers)
Pages: 34
Date: 2023-09-06
New Economics Papers: this item is included in nep-ban, nep-cba and nep-fdg
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