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The process of macroprudential oversight in Europe

  • Peter Sarlin
  • Henrik J. Nyman

The 2007--2008 financial crisis has paved the way for the use of macroprudential policies in supervising the financial system as a whole. This paper views macroprudential oversight in Europe as a process, a sequence of activities with the ultimate aim of safeguarding financial stability. To conceptualize a process in this context, we introduce the notion of a public collaborative process (PCP). PCPs involve multiple organizations with a common objective, where a number of dispersed organizations cooperate under various unstructured forms and take a collaborative approach to reaching the final goal. We argue that PCPs can and should essentially be managed using the tools and practices common for business processes. To this end, we conduct an assessment of process readiness for macroprudential oversight in Europe. Based upon interviews with key European policymakers and supervisors, we provide an analysis model to assess the maturity of five process enablers for macroprudential oversight. With the results of our analysis, we give clear recommendations on the areas that need further attention when macroprudential oversight is being developed, in addition to providing a general purpose framework for monitoring the impact of improvement efforts.

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File URL: http://arxiv.org/pdf/1312.7545
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Paper provided by arXiv.org in its series Papers with number 1312.7545.

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Date of creation: Dec 2013
Date of revision: Sep 2014
Handle: RePEc:arx:papers:1312.7545
Contact details of provider: Web page: http://arxiv.org/

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  1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(3), pages 291-299, September.
  2. Asli Demirgüç-Kunt & Enrica Detragiache, 1998. "The Determinants of Banking Crises in Developing and Developed Countries," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 81-109, March.
  3. Betz, Frank & Oprică, Silviu & Peltonen, Tuomas A. & Sarlin, Peter, 2014. "Predicting distress in European banks," Journal of Banking & Finance, Elsevier, vol. 45(C), pages 225-241.
  4. Holló, Dániel & Kremer, Manfred & Lo Duca, Marco, 2012. "CISS - a composite indicator of systemic stress in the financial system," Working Paper Series 1426, European Central Bank.
  5. Gary Gorton, 1986. "Banking panics and business cycles," Working Papers 86-9, Federal Reserve Bank of Philadelphia.
  6. John Fell & Garry Schinasi, 2005. "Assessing Financial Stability: Exploring the Boundaries of Analysis," National Institute Economic Review, National Institute of Economic and Social Research, vol. 192(1), pages 102-117, April.
  7. Beverly Hirtle & Til Schuermann & Kevin Stiroh, 2009. "Macroprudential supervision of financial institutions: lessons from the SCAP," Staff Reports 409, Federal Reserve Bank of New York.
  8. Iman van Lelyveld & Franka Liedorp, 2006. "Interbank Contagion in the Dutch Banking Sector: A Sensitivity Analysis," International Journal of Central Banking, International Journal of Central Banking, vol. 2(2), May.
  9. Upper, Christian & Worms, Andreas, 2004. "Estimating bilateral exposures in the German interbank market: Is there a danger of contagion?," European Economic Review, Elsevier, vol. 48(4), pages 827-849, August.
  10. Castrén, Olli & Fitzpatrick, Trevor & Sydow, Matthias, 2009. "Assessing portfolio credit risk changes in a sample of EU large and complex banking groups in reaction to macroeconomic shocks," Working Paper Series 1002, European Central Bank.
  11. Paul de Grauwe, 2013. "Design Failures in the Eurozone - can they be fixed?," European Economy - Economic Papers 491, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  12. repec:ecb:ecbwps:20111426 is not listed on IDEAS
  13. Alessi, Lucia & Detken, Carsten, 2011. "Quasi real time early warning indicators for costly asset price boom/bust cycles: A role for global liquidity," European Journal of Political Economy, Elsevier, vol. 27(3), pages 520-533, September.
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