A Forum for Central Bankers--Taking Stock of the World's Oldest IFI

Péter Ákos Bod, Professor at Corvinus University in Budapest, discusses a new book on The Bank for International Settlements (BIS). Set up in May 1930, the BIS is the world's oldest international financial organisation, and brings together central bankers from around the world.

Bod writes in the latest F&D magazine that "the BIS is an international institution that has had to assume new roles under drastically changing global conditions. 

"Collecting banking data, conducting high-quality research, and providing prudential advice are its vital contribution to the proper functioning of modern finance. 

"The common European currency and the foundation of the European Central Bank presented the BIS with new challenges, as does the growing importance of the so-called BRICS (Brazil, Russia, India, China, South Africa) and other emerging economies, whose central banks want to be heard and taken into account. The BIS will continue and prosper if it keeps reacting as innovatively and efficiently to the objective demands of international high finance as it has throughout its existence.­"

Financial System Still Needs to Be Fixed

The financial system still has not been fixed and remains dangerous and fragile, says Anat Admati of Stanford University and Martin Hellwig from the University of Bonn in their book The Bankers’ New Clothes: What's Wrong with Banking and What to Do about It.  Banks remain too highly leveraged and debt is addictive. But the system can still be fixed, they argue.

Anat Admati and Martin Hellwig speak at the Peterson Institute and discuss whether banking reforms require the sacrifice of lending and economic growth. They outline an ambitious proposal to shore up financial systems and prevent future financial crisis.




Read a review in Finance & Development magazine

Admati exposes the flaws in the banking system that could trigger another financial collapse, and lays out a plan to fix it. She speaks her to Stanford Business.




Report card on global financial reform.

Banking on Europe

The IMF has published a new policy paper on banking supervision in Europe as part of its Staff Discussion Note series. The paper, titled "A Banking Union for the Euro Area," argues that a union is the logical conclusion of the idea that integrated banking systems require integrated prudential oversight.

The case for a banking union for the euro area is both immediate and longer term. 

Moving responsibility for potential financial support and bank supervision to a shared level can reduce fragmentation of financial markets, stem deposit flight, and weaken the vicious loop of rising sovereign and bank borrowing costs. In steady state, a single framework should bring a uniformly high standard of confidence and oversight, reduce national distortions, and mitigate the buildup of concentrated risk that compromises systemic stability. "Time is of the essence," the paper argues.

Read an article in IMF Survey magazine