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Financial Supervision Mechanism. David Kozelský MA1N0219 Financial Management. Agenda. Norway system in the CR Decision-making status quo Disadventage of the model Adventages of the model Management changes in 2008. Norway system in the CR.

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financial supervision mechanism

Financial Supervision Mechanism

David Kozelský

MA1N0219

Financial Management

agenda
Agenda
  • Norway system in the CR
  • Decision-making status quo
  • Disadventage of the model
  • Adventages of the model
  • Management changes in 2008
norway system in the cr
Norway system in the CR
  • In 1986 Norway became the first countryto integrate all supervision activities into one authority (Kredittilsynet).
  • The model of integrated financial supervision within theframework of the central bank is characterized by integration ofmonetary policy and all supervisory activities
  • After the revolution (1989) CR has tried to overtake this model – one authority - CNB (Central National Bank), succesfuly accepted in 2006
  • This model is characterized bya very close personnel and information connection between the monetary policy and supervisory activities.
decision making status quo
Decision-making status quo
  • Decision-making power within supervisory process is held by supervisory department management.
  • Monetary policy and supervisory activities are strictly separated.
  • The supervisory institution is not a part of the central bank, neither another public administration body.
  • The financing system of the supervisory body has toensure its financial independence so that the institution can recruitqualified employees and acquire up-to-date technical instruments for supervisory activities performance.
disadventages of the model
Disadventages of the model
  • Central Bank is an active participant in bond market where thebank exercises at the same time its supervision
  • risk of damage to reputation of the Central Bank and efforts tomaintain the monetary authority credibility constitute limitations of supervisory activities
  • risk of conflict of interest between the monetary policy andsupervisory activities of the Central Bank
  • considerable concentration of power outside direct sphere of the government/parliament activity
  • conflict between the Central Bank’s independence, necessary for
  • monetary policy performance
adventages of the model
Adventages of the model
  • Independent financing, separate from state budget
  • Usage of Central Bank’s infrastructure not only for the monetary policy
  • Efficient information flows between the banking supervision andmonetary section of the Central Bank
  • Elimination of risk of communication noise and information rigidity
  • Compensation for the loss of Central Bank’s competences inprudential supervision with respect to the EU principle of home country supervision
  • More efficient international cooperation
management changes in 2008
Management changes in 2008
  • Starting from the beginning of 2008, the Central Bank’smanagement changed the sector-oriented organization, to regroup thedepartments internally and create three new departments
    • FinancialMarket Regulation and Analysis Department
    • Licensing and EnforcementDepartment
    • Financial Market Supervision Department
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