Multiple safety net regulators and agency problems in the European Union: Is prompt corrective action partly the solution?

This paper discusses the institutional changes needed in Europe if prompt corrective action (PCA) is to be effective in supervising and resolving cross-border banking groups. The paper identifies these changes starting with enhancements in the availability of information on banking groups’ financial condition to prudential supervisors. Next, the paper considers the collective decision making by prudential supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank in a cross-border banking group falls below the minimum capital standard. Finally, the paper analyzes the coordination measures that should be implemented if PCA requires the bank to be resolved.

What Do Commissars Do?

The note considers the possible interaction between the narrowing of wage differentials in China and the degree of hierarchy-cum-supervision at the plant level in the Chinese economy. It is argued that the Chinese regime may end up with greater hierarchy in its techniques of production, paradoxically, as a result of the narrowing of wage differentials. In developing this thesis, the note raises an issue of novelty in the theory of comparative economic systems

Multiple safety net regulators and agency problems in the EU: is Prompt Corrective Action a partial solution?

Prompt Corrective Action (PCA) provides a more efficient mechanism for dealing with problem banks operating in more than one European country. In a PCA framework, a bank’s losses are likely to be substantially reduced. This reduction in the losses to deposit insurance and governments will improve the problem of allocating those losses across the various insurance schemes and make it less likely that any deposit insurer will renege on its obligations in a cross-border banking crisis. This paper explores the institutional changes needed in Europe if PCA is to be effective in resolving the cross-border agency problems that arise in supervising and resolving cross-border banking groups. The paper identifies these changes starting with enhancements in the availability to prudential supervisors of information on banking groups’ financial condition. Next, the paper considers collective decision-making by prudential supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank of a cross-border banking group falls below the minimum capital standard. Finally, the paper analyses the coordination measures that should be implemented if PCA requires the bank to be resolved.banking supervision; European Union; Prompt Corrective Action

Recapitalizing Banks with Public Funds

Recapitalizing banks in a systemic crisis is a complex medium-term process that requires significant government intervention and careful management at both the strategic and individual bank levels. This paper examines the range of operational and strategic issues involved and the institutional arrangements needed to foster an effective banking system restructuring, as well as maximize the returns on government investment. Recapitalization approaches have varied in the different mixes of direct capital injections and asset purchases and rehabilitation that countries choose. The choice of an appropriate mix is critical to minimizing the expected present value of government outlays net of recoveries. Copyright 2001, International Monetary Fund

Circuit theory of finance and the role of incentives in financial sector reform

The author analyzes the financial system's role in economic growth and stability, addressing several core policy issues associated with financial sector reform in emerging economies. He studies finance's role in the context of a circuit model, with interacting rational, forward-looking, heterogeneous agents. He shows finance to essentially complement the price system in coordinating decentralized intertemporal resource allocation choices made by agents operating with limited information and incomplete trust. He discusses the links between finance and incentives for efficiency and stability in the context of the circuit model. He also identifies incentives and incentive-compatible institutions for reform strategies for financial sectors in emerging economies. Among his conclusions: 1) Circuit theory features important methodological advantages to analyze the role of finance, and to assess structural weaknesses of financial systems under different institutional settings and in different stages of economic development. 2) Incentives for prudence and honesty can protect the stability of the circuit by directing private sector forces unleashed by liberalization. In particular: a) Financial institutions should be encouraged to invest in reputational capital. b) Governments should complement the creation of franchise value by strengthening supervision and by adopting a regulatory regime based on rules designed to align the private incentives of market players with the social goal of financial stability. c) Safety nets to reduce systemic risk should minimize the moral hazard from stakeholders by limiting risk protection and by making the cost of protection sensitive to the risk taken. d) Governments should encourage self-policing in the financial sector. e) Where information and trust are scarce, there is a potential market for them, and governments can greatly improve incentives for optimal provision of information. f) Governments should strengthen the complementarity between the formal and the informal financial sectors. Emphasizing incentives is not to deny the importance of good rules, capable regulators andsupervisors, and strong enforcement measures. It is to suggest that the returns on investments to set up rules, institutions, and enforcement mechanisms can be greater if market players have an incentive to align their own objectives with the social goal of financial stability.Banks&Banking Reform,Economic Theory&Research,Payment Systems&Infrastructure,Environmental Economics&Policies,Financial Intermediation,Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Financial Intermediation,International Terrorism&Counterterrorism

Finance for Growth: Policy Choices in a Volatile World

Understanding just how finance contributes to development—and how good policy can help guarantee its contribution—has been the focus of a major research effort in recent years. This research has included systematic case-study analyses of the experiences of specific countries, as well as more recent econometric analyses of extensive cross-country data sets. Finance for Growth draws on this research and uses it to develop an integrated view of how financial sector policy can be used to foster growth, maintain stability and bring about poverty reduction.Financial sector development; financial regulation; globalization of finance; finance in developing countries

Multiple safety net regulators and agency problems in the EU : is Prompt Corrective Action partly the solution?

Incluye bibliografíaThis paper presents a stylized mechanism aimed at dealing with the cross border agency problems that arise in supervising and resolving cross border banking groups in the European Union (EU). The authors assume that PCA policies have been implemented by the national supervisors and explore the institutional changes needed in Europe if PCA is to be effective as an incentive compatible mechanism. The paper identifies these changes starting with enhancements in the availability of information on banking groups to supervisors. Next, the paper considers the collective decision making by supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank of a cross border banking group falls below the minimum capital standard. Finally, the paper analyzes the coordination measures that should be implemented if PCA requires the bank to be resolve

MS

thesisA survey was conducted to examine how managers evaluate the competency of individual hospital pharmacists in a decentralized or satellite setting. Sixteen hospitals in the Western United States were surveyed onsite by the author. Sixteen managers and 40 staff pharmacists were interviewed. The objectives of this study were: (a) to investigate the performance appraisal process used by the organization (including the type of evaluation tool used and frequency of performance appraisal), and (c) to examine management and employee expectations of the appraisal process. The results of this study indicate that managers do the annual evaluation because it is required. Most managers to no use the performance appraisal for developmental purposes. Managers tend to perceive the entire process of the performance appraisal as more meaningful and reliable than do the pharmacists. Fifty-six percent of the hospital pharmacies surveyed use the graphic rating scale type of appraisal instrument. This type of instrument is easy to develop and use, but generally provides information on personality traits, rather that on actual performance. Thirty-eight percent of surveyed pharmacies use the performance standards type of appraisal. Eighty percent of the pharmacists feel manager do not have enough contact with the pharmacist to accurately evaluate performance, while 56% of the managers believe there is sufficient contact to evaluate performance. Managers do the majority of pharmacist performance ratings, but both managers and pharmacists agree that peer pharmacists should rate other pharmacists' performance. On the average, managers believe they give positive feedback to the pharmacists at least once a month, while pharmacist believe positive feedback occurs only once per year. A significant number of pharmacist do not know what is expected of them to improve their performance for the next appraisal. General, the performance appraisal gravitates to the low side of the manager's priority list until attention is required to meet a mandated deadline

Federated Robust Embedded Systems: Concepts and Challenges

The development within the area of embedded systems (ESs) is moving rapidly, not least due to falling costs of computation and communication equipment. It is believed that increased communication opportunities will lead to the future ESs no longer being parts of isolated products, but rather parts of larger communities or federations of ESs, within which information is exchanged for the benefit of all participants. This vision is asserted by a number of interrelated research topics, such as the internet of things, cyber-physical systems, systems of systems, and multi-agent systems. In this work, the focus is primarily on ESs, with their specific real-time and safety requirements. While the vision of interconnected ESs is quite promising, it also brings great challenges to the development of future systems in an efficient, safe, and reliable way. In this work, a pre-study has been carried out in order to gain a better understanding about common concepts and challenges that naturally arise in federations of ESs. The work was organized around a series of workshops, with contributions from both academic participants and industrial partners with a strong experience in ES development. During the workshops, a portfolio of possible ES federation scenarios was collected, and a number of application examples were discussed more thoroughly on different abstraction levels, starting from screening the nature of interactions on the federation level and proceeding down to the implementation details within each ES. These discussions led to a better understanding of what can be expected in the future federated ESs. In this report, the discussed applications are summarized, together with their characteristics, challenges, and necessary solution elements, providing a ground for the future research within the area of communicating ESs

The mechanics and regulation of variable payout annuities

This paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in which the underlying reserve assets are invested, their profit sharing features, and the treatment of longevity risk. The paper focuses on the treatment of investment and longevity risks by different types of these annuities and underscores the challenge of establishing a robust and effective framework of regulation and supervision for these products. The paper also addresses the exposure of annuitants to integrity risk and places special emphasis on the need for a high level of meaningful transparency.Debt Markets,Insurance&Risk Mitigation,Investment and Investment Climate,Pensions&Retirement Systems,Non Bank Financial Institutions