Banking Regulation And Supervision Flashcards
What make up the financial market?
- the banking system
- the capital market
- the insurance sector
What are the financial markets?
They are an economic space where diverse operators such as banks, financial intermediaries, mutual funds, insurace firms provide services.
What are the objectives of financial markets?
- The pursuit of macro- and microeconomic stability.
- The transparency in the market
- The safeguarding of competition in the financial sector.
What are the models for financial regulation and supervision?
Insitutional supervision
Supervision by objectives
Functional supervision
Single regulator supervision
The most used model is the institutional supervision.
What are the pillars of the european system of financial supervision?
Micro-prudential supervision
Macro-prudential supervision: tasked with oversight of the financial system within the EU to prevent systemic risk.
What is the single rulebook?
It is the foundation of the banking union, created after the 2007 crisis.
It is made up of legislative texts that all EU financial institutions must comply with.
What is the purpose of the single rulebook?
To increase the EU banks’ strength
To reduce the costs of bank failures
To manage systemic risk
What is the single supervision mechanism?
It is a system of the ECB which acts as a prudential advisor of financial institutions in the euro area.
What does the single resolution mechanism do?
It applies to the banks covered by the single supervision mechanism.
It ensures an orderly resolution of failing banks with minimal costs to taxpayers by recapitalization or liquidation.
What is the single deposit guarantee scheme?
It applies to deposits below 100.000 euros.
When a bank is placed in insolvency, it guarantees to pay the deposits to which it applies to.
What is banking supervision?
It involves the rules that must be complied with when setting up banks and carrying out business. It aims to provide a stable financial system.
What are the types of banking supervision?
On-site supervision: examination of banks’ credit documentations and financial statements
Off-site supervision: realized through submitted reports and financial statements and aims to quickly identify trends
What does the basel committee of banking supervision do?
It formulates broad supervisory standards and recommends statements of best practices.
Who performs financial supervision in Romania?
NBR for the banking sector
Financial supervisory authority for securities, insurance and private pensions.
