Problem Bank - Bank Supervision Manual Guide John W. McCoy

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Published: November 1st 2011

Kindle Edition

142 pages


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Problem Bank - Bank Supervision Manual Guide  by  John W. McCoy

Problem Bank - Bank Supervision Manual Guide by John W. McCoy
November 1st 2011 | Kindle Edition | PDF, EPUB, FB2, DjVu, talking book, mp3, RTF | 142 pages | ISBN: | 4.46 Mb

This Manual of suggested policies and procedures provides a comprehensive framework for implementing timely and effective responses to banking problems. By adopting and adhering to well-reasoned policies and procedures, several benefits will beMoreThis Manual of suggested policies and procedures provides a comprehensive framework for implementing timely and effective responses to banking problems.

By adopting and adhering to well-reasoned policies and procedures, several benefits will be realized.First, bank supervisory responses will be applied in a fair and consistent manner- Second, supervisory responses will be more transparent, thereby protecting the respective government and the Central Bank of the country as the supervisory authority from charges of impropriety- andThird, the cost of resolving problems will be minimized- and last, the ultimate health and profitability of the banking system will be enhanced.These suggested policies are based on the supervisory assumption of early identification and prompt response action.

The most cost-efficient method of dealing with banking problems is to identify problems early and act quickly to eliminate the symptoms and causes. This requires that bank supervisors have adequate capacity in terms of authority and resources (particularly skilled and experienced examination staff and management)- that a proper legal frame work exists to support their decisions and actions- and, most importantly, that Government has the resolve, in concept and in practice, to protect bank depositors but not shareholders, directors and officers.

In the absence of these requisites, abuses within the banking sector will allow inadequate or unscrupulous bank managers and owners to enjoy undeserved profits and benefits at public expense.The objective of banking supervision is to protect the banking system but not to protect investors. Where it is not possible or feasible to restore a problem bank to health, a bank will be allowed to fail. In keeping with a firm but fair exit policy, the Central Bank will only provide liquidity support to distressed but viable banks- the Central Bank should not, however, bail out banks, their investors or institutional creditors.

In the event there are compelling reasons to prevent systemic crises or to protect an individual bank, this policy will require that the Government provide the necessary guarantees or funding until the bank is fully restored to a safe, sound condition.



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