1. bookVolume 3 (2014): Issue 3 (September 2014)
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
access type Open Access

Challenges to the Implementation of a New Framework for Safeguarding Financial Stability

Published Online: 25 Sep 2014
Volume & Issue: Volume 3 (2014) - Issue 3 (September 2014)
Page range: 19 - 52
Received: 17 Jul 2014
Accepted: 27 Aug 2014
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
Abstract

There is probably no single economic concept that has attracted more attention and intrigued scientific and professional circles than financial stability. For over a decade now that have been efforts to establish the starting point in explaining this condition or characteristic of the financial system since some find that the key to defining financial stability lies in stability and others argue in favour of the opposite, instability. Unfortunately, no agreement has been reached on a universal definition that would be widely accepted at the international level. Consequently, this gave rise to open discussions on systemic risk, creating a framework for preserving financial stability, and the role of central banks in this process. This article analyses the results achieved in the development of a theoretical concept of financial stability and its practical implementation. A consensus has been reached on the necessity of removing rigid barriers between macro and prudential policies and on the necessity of their coordinated actions. The primary objectives of monetary and fiscal stability have been shifted towards preserving financial stability. The isolated macroprudential principle rightfully got the epithet of an archaic approach. Coordinated micro and macroprudential policies have definitely prevailed and become reality in many countries, including Montenegro. Created institutional frameworks for safeguarding financial stability at all levels - national, Pan-European and global - represent a challenge for further comparative studies.

Keywords

1. Borio, C. (2003), Towards a macroprudential framework for financial supervision and regulation?, Bank for International Settlements, WP No 128, Basel.10.2139/ssrn.841306Search in Google Scholar

2. Caruana, J. (2010), Systemic risk: How to deal with it?, Bank for International Settlements, Basel.Search in Google Scholar

3. Caruana, J. (2010), Speech delivered at the 50th Anniversary Symposium of the Reserve Bank of Australia, Sydney, 9 February 2010, http://www.bis.org/ speeches/sp100209.htmSearch in Google Scholar

4. Crockett, A. (1997), The Theory and Practice of the Financial Stability, Essay in International Finance No 203, Princeton University.Search in Google Scholar

5. Crockett, A. (2000), “Marrying the micro and macroprudential dimensions of financial stability”, speech at the 11th International Conference of Banking Supervisors, Basel.Search in Google Scholar

6. De Bandt, O. and Hartmann, P. (2000), Systemic risk: A survey, European Central Bank, Working Paper Series No. 35.Search in Google Scholar

7. Dijkman, M. (2010), A Framework for Assessing Systemic Risk, Policy Research Working Paper 5282, World Bank, Washington, D.C.10.1596/1813-9450-5282Search in Google Scholar

8. European Central Bank, (2009), “The concept of systemic risk”, Financial Stability Review, December 2009.Search in Google Scholar

9. European Central Bank, (2010a), Recent Advances in Modelling Systemic Risk Using Network Analysis, summary of a workshop of the same name organised by the ECB in October 2009.Search in Google Scholar

10. European Central Bank, (2010b), Macro-prudential policy objectives and tools, Financial Stability Review, June 2010.Search in Google Scholar

11. European Central Bank, (2013), Preparatory work for banking supervision at the ECB, Financial Stability Review, November 2013, Frankfurt.Search in Google Scholar

12. European Systemic Risk Board, (2011), Recommendation of the European Systemic Risk Board of 22 December 2011, on the macro-prudential mandate of national authorities, ESRB/2011/3.Search in Google Scholar

13. Goodhart, C.A.E. (2010), The changing role of central banks, BIS, Working papers No 326. Verhelst, S., 2013, Assessing the Single Supervisory Mechanism: Passing the Point of No Return for European Banking Union, Egmont Paper 58, Egmont - The Royal Institute for International Relations, Brussels.Search in Google Scholar

14. Frait, J. and Komarkova, Z. (2011), Financial stability, systemic risk and macroprudential policy, Czech National Bank, Financial Stability Report 2010/2011.Search in Google Scholar

15. Group of Ten, (2001), Consolidation in the Financial Sector, Bank for International Settlement, Basel.Search in Google Scholar

16. Haldane, A. G. (2009), “Why banks failed the stress test”, Speech given at the Marcus-Evans Conference on Stress-Testing, 9-10 February 2009.10.1109/9780470544051.ch2Search in Google Scholar

17. Hannoun, H. (2010), “Towards a global financial stability framework”, BIS, 45th SEACEN Governors’ Conference Siem Reap province, Cambodia, 26-27 February 2010.Search in Google Scholar

18. International Monetary Fund, (2009), Fiscal Implications of the Global Economic and Financial Crisis, SPN/09/13, Washington, D.C.10.5089/9781462374755.004Search in Google Scholar

19. International Monetary Fund, (2013), The interaction of monetary and macroprudential policies, Washington, D.C.Search in Google Scholar

20. International Monetary Fund, Bank for International Settlement, Financial Stability Board, (2009), Guidance to assess the systemic importance of financial institutions, markets and instruments: initial considerations, Washington,D.C. Group of Ten, 2001, Consolidation in the Financial Sector, Bank for International Settlement, Basel.Search in Google Scholar

21. Kozarić K., Fabris N. (2012), Monetarno-kreditna politika, Štamparija Fojnica, Sarajevo.Search in Google Scholar

22. Krugman, P. (2010), Povratak ekonomije depresije i svetska kriza 2008., Heliks, Smederevo.Search in Google Scholar

23. Mishkin, F. (1997), The Causes and Propagation of Financial Instability: Lessons for Policymakers, in Maintaining Financial Stability in a Global Economy, Symposium Proceedings, Federal Reserve Bank of Kansas City, 24. Mishkin, F. (1999), “Global Financial Instability: Framework, Events, Issues”, Journal of Economic Perspectives, Vol. 13, No. 4, Autumn, 25. Schinasi, G.J. (2003), Responsibility of Central Banks for Stability in Financial Markets, IMF, WP/03/121, 26. Schinasi, G.J. (2006), “Safeguarding financial stability: theory and practice”, IMF, Washington, D.C.Search in Google Scholar

27. Schinasi, G.J. and Truman, E.M. (2010), Reform of the global financial architecture, Bruegel Working Paper No 2010/05, Bruegel.10.2139/ssrn.1692186Search in Google Scholar

28. Schooner, H.M. and Taylor, M.W. (2010), Global Bank Regulation, Principles and Policies, Elsevier Inc., London.Search in Google Scholar

29. Smaga, P. (2013), Assessing Involvement of Central Banks in Financial Stability, Center for financial stability, Policy paper, New York.Search in Google Scholar

30. Trichet, J.C. (2009), Systemic risk, Clare Distinguished Lecture in Economics and Public Policy, Cambridge University, CambridgeSearch in Google Scholar

31. Trichet, J.C. (2011), “Intellectual challenges to financial stability analysis in the era of macroprudential oversight” In: “Global imbalances and financial stability”, Financial Stability Review, Banque de France.Search in Google Scholar

32. Verhelst, S. (2013), Assessing the Single Supervisory Mechanism: Passing the Point of No Return for European Banking Union, Egmont Paper 58, Egmont - The Royal Institute for International Relations, Brussels. Search in Google Scholar

1. Constitution of Montenegro (OGM no. 1/07).Search in Google Scholar

2. Central Bank of Montenegro Law (OGM no. 40/10, 46/10, 6/13).Search in Google Scholar

3. Financial Stability Council Law (OGM no. 44/10).Search in Google Scholar

4. Recital 24 of Regulation EU No 1092/2010 10.1080/13854046.2010.508897Search in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo