Large and Complex Financial Institutions: Challenges and Policy Responses: Lessons from Sweden

By R. B. Johnston, Balázs Horváth, Luca Errico, Jingqing Chai

March 1, 2003

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Format: Chicago

R. B. Johnston, Balázs Horváth, Luca Errico, and Jingqing Chai. Large and Complex Financial Institutions: Challenges and Policy Responses: Lessons from Sweden, (USA: International Monetary Fund, 2003) accessed November 8, 2024

Disclaimer: This Policy Dicussion Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the regulatory and supervisory implications stemming from the dominance of large and complex financial institutions, drawing on the recent Financial Sector Assessment Program (FSAP) mission work on Sweden. The analysis highlights the importance of consolidated supervision, of a greater emphasis on effective management and corporate governance structures, and of measures strengthening the disciplinary role of the private sector. It calls for developing credible liquidity and crisis management arrangements through appropriate attention to the cross-product and cross-border nature of large and complex financial institution (LCFI) operations. Strengthened supervisory and regulatory responses will enable financial markets to better assess the nature and sources of residual risks they have to face and, on this basis, to develop more effective risk-mitigating measures.

Subject: Banking, Economic sectors, Financial crises, Financial regulation and supervision, Financial sector, Financial sector policy and analysis, Moral hazard, Stress testing

Keywords: Baltics, Business name, Financial institution, Financial institution solvency, Financial sector, Large and complex financial institutions, LCFI operations, LCFIs active, LCFI's banking, Market confidence, Market discipline, Moral hazard, PDP, Policy lessons, Solvency support, Stress testing, Swedish LCFIs, Systemic importance

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 2003/001
Stock No:

PPIEA0012003
ISBN:

9781451975031
ISSN:

1564-5193

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