Matei Dohotaru, Marin Prisacaru, Ji Ho Shin and Yasemin Palta
Main challenges faced by the financial sector supervisors
Over the last two decades, a primary goal of financial sector supervisory authorities around the world has been to effectively implement the riskbased supervision framework. An RBS approach is widely regarded as the most effective means to ensure the stability of the financial sector. This goal has transformed over time to become the main challenge for supervisory authorities. Yet despite significant resources allocated for the implementation of the RBS approach, in addition to often considerable technical assistance provided, many supervisors continue to struggle to implement an effective RBS regime.1 The reasons for the difficulties in implementing an effective RBS framework vary from country to country and encompass both internal and external factors.
The RBS framework can be disaggregated by different criteria, one of which disaggregates it into three main categories: A. Policies & Procedures, B. Capacity & Resources, and C. Tools & Technologies (Figure 1). We examined these three categories by looking at the assessments of compliance with Basel Core Principles for Effective Banking Supervision (BCP) conducted during FSAPs. As part of this research, publicly available FSAP documents have been reviewed, including the Financial Sector Assessment (WB),2 the Financial System Stability Assessment (IMF),3 the Detailed Assessment of Observance as well as International Financial Institutions’ publications. It is important to note that the research was mainly focused on prudential supervision and compliance with BCP Principles.
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