Central bank’s role and involvement in bank regulation: Lender of last resort arrangements and the Special Resolution Regime (SRR)
AbstractThis paper considers developments which have necessitated greater involvement and a greater role for the central bank in financial regulation and supervision. The aftermath of the 2007/08 financial crisis has witnessed the enactment of legislation such as the Banking Act of 2009 which has not only introduced greater statutory powers for the central bank, but also the Special Resolution Regime. As well as a consideration of arguments which are in favour of the central bank’s role as supervisor and lender of last resort, the importance of central bank independence and safeguards which exist to ensure that sufficient accountability is fostered, will be considered. Safeguards and accountability mechanisms which are adequate, such that, whilst ensuring that the regulator is not susceptible to regulatory capture, do not impede the ability of such a regulator to obtain vital and necessary information from systemically important individual financial institutions. In its support of the view that central banks should assume a greater role in supervision, this paper not only seeks to justify why such a degree of involvement is vital to ensuring and maintaining stability in the financial system, but also those factors which are considered to be necessary if such a role is to be effective.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 33670.
Date of creation: Jun 2009
Date of revision: Sep 2011
central; bank; lender; last; resort; regulation; monetary; policy; special resolution regime; Financial Crisis; liquidation; bankruptcy; systemic risks; living wills; bailing in; resolution procedures; deposit protection; liquidity;
Other versions of this item:
- Ojo, Marianne, 2009. "Central bank’s role and involvement in bank regulation: Lender of last resort arrangements and the Special Resolution Regime (SRR)," MPRA Paper 15771, University Library of Munich, Germany.
- K2 - Law and Economics - - Regulation and Business Law
- D0 - Microeconomics - - General
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G01 - Financial Economics - - General - - - Financial Crises
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Reinhart, Carmen & Felton, Andrew, 2008. "The First Global Financial Crisis of the 21st Century," MPRA Paper 11862, University Library of Munich, Germany.
- Michael Taylor & Marc Quintyn & Eva H. G. HÃ¼pkes, 2005. "The Accountability of Financial Sector Supervisors: Principles and Practice," IMF Working Papers 05/51, International Monetary Fund.
- Dirk Schoenmaker, 1992. "Institutional Separation between Supervisory and Monetary Agencies," FMG Special Papers sp52, Financial Markets Group.
- . . & Willem Buiter, 2008. "Central banks and financial crises," FMG Discussion Papers dp619, Financial Markets Group.
- Ojo, Marianne, 2009. "Basel II and the Capital Requirements Directive: Responding to the 2008/09 Financial Crisis," MPRA Paper 17379, University Library of Munich, Germany.
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