Financial supervision mechanism
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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

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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


Financial supervision mechanism

Have a nice day!


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