BIS's Financial Stability Institute hosts conference on supervisory policy implementation - "a cross-sectoral journey"

The Financial Stability Institute (FSI) concluded its two-day conference on cross-sectoral supervisory policy implementation in the current macro-financial environment.

Taking place on 18-19 September at the Bank for International Settlements (BIS) in Basel, Switzerland, the conference was attended by banking, insurance and securities supervisory authorities as well as by deposit insurers, academics and private sector representatives from around the world. More than 180 participants from 73 different jurisdictions attended the conference.

Meeting participants reviewed macroeconomic, regulatory and financial developments and discussed in various panel sessions the broader policy challenges currently faced by financial authorities.

In his opening address, Jaime Caruana, General Manager of the BIS highlighted that "proper implementation is essential to reaping the full benefits of the global regulatory reforms. It is crucial to ensure consistency among the different segments of the regulated financial sector. It is also vital to promote a level playing field both within and across jurisdictions".

Mr Caruana concluded his address emphasising the importance of international cooperation for global financial stability. "Without the dedicated spirit of cooperation across national authorities, the substantial strengthening of regulations governing the functioning of the financial system would not have been possible. We should certainly maintain this attitude and level of commitment in order to deal effectively with the challenges that lie ahead of us."

Sir John Vickers, professor at the University of Oxford, stressed in a keynote address, that the post-crisis banking reforms may need to be further developed to ensure sufficient resilience of the banking sector: "Basel III is a huge improvement on Basel II. It should however be seen as a staging point, not an end-point, and it should be built upon in the years ahead."

Lorenzo Bini Smaghi, Chairman of the Board of Société Générale, highlighted in his keynote address the threats for the financial sector that arise from excess savings in the global economy, making institutions more vulnerable to aggregate shocks: "- the excess flow of net savings may lead to the paradoxical result that when the next crisis happens, public funds will have to be used even more than in the past".

The third keynote speech was delivered by Donald Kohn, an external member of the Bank of England's Financial Policy Committee, who emphasised the importance of ensuring sufficient cooperation and coordination between monetary policy and micro and macro prudential policies: "Because each policy works at least in part by affecting the cost and availability of credit, how each policy is carried out can affect the primary objective of the other policies - and therein lies the opportunity for cooperation and coordination to improve overall outcomes".

In the various panels, speakers and participants discussed the impact of the post-crisis reforms for banks and financial infrastructure and assessed work to develop international capital standards for insurance companies. They also addressed emerging challenges such as fintech, exchanged views on the development of market-based finance, and discussed proportionality in financial regulation.

In his concluding remarks, FSI Chairman Fernando Restoy stressed that, with the post-crisis regulatory reforms nearing completion, it is appropriate to shift emphasis from regulation to effective implementation and the promotion of best supervisory practices. He also emphasised that the macroeconomic environment, the new regulatory framework and the new technological developments are likely to substantially modify the shape of the financial system. In that context, new players, activities and competitive environments will most likely trigger relevant changes in the reach and methods of financial supervision.

Note to editors

The FSI was jointly created in 1998 by the BIS and the Basel Committee on Banking Supervision to assist supervisors around the world in improving and strengthening their financial systems.

The FSI promotes sound supervisory standards and practices globally and supports implementation of these standards in all jurisdictions. This is achieved through the production of papers on policy implementation, the organisation of conferences, meetings and seminars and the development of online training tools.

For more about the FSI, visit www.bis.org/fsi.