Regulatory Affairs

IIF Releases Two New Reports on Effective Supervision and Macroprudential Oversight

July 11, 2011

The Institute of International Finance publicly released today at a press conference in London two key new reports prepared under the auspices of the Special Committee on Effective Regulation:

Achieving Effective Supervision: An Industry Perspective, prepared by the Effective Supervision Advisory Group under Mrs Kerstin af Jochnick, Managing Director of the Swedish Bankers’ Association; and Macroprudential Oversight: An Industry Perspective, prepared by the Senior Working Group on Macroprudential Oversight.

The report Achieving Effective Supervision: An Industry Perspective addresses the issue of how to make supervision more effective both nationally and globally in the light of the financial crisis. It argues that such supervision has a central role in reinforcing and sustaining sound industry practices and in buttressing strengthened regulation and resolution arrangements. It makes it clear that the industry would welcome more intensive, challenging and action-focused supervision and that the industry is prepared to meet the costs of this. It also stresses the major responsibility of the industry to support effective supervision and includes twelve core recommendations to firms aimed at improving the level and nature of engagement with supervisors.

The report Macroprudential Oversight: An Industry Perspective stresses that the IIF strongly supports the development of macroprudential oversight and tools but encourages regulators to balance the need for rapid progress with a degree of caution and a willingness to learn and adapt in the light of experience. The report mainly takes the form of a number of guiding principles that the industry believes should be followed in going forward. In particular, it calls for macroprudential authorities in each jurisdiction and effective international coordination; monitoring of the shadow banking system; and the avoidance of over-reliance on a single macroprudential tool such as capital.