International finance International banking

International finance Lecture outline  International banking as a part of the IMS  International banking market  Supervision in international banking

International finance International banking as a part of the IMS  International banks  International financial organisations  Central banks  International financial institutions

International finance International banking as a part of the IMS  Banks servicing international trade  Interbank financial settlements system  Financing international trade

International finance International banking activity  Interbank loans and deposits  Financing international transactions  Issuance od eurobonds  Consortium credit  Servicing eurocurrency markets  Managing international asset portfolios

International finance The international banking market  A part of the international financial market  Participants  Finacial centres

International finance International banking centres  Number of foreign banks  Share of foreign currency transactions  Share of non-residents

International finance International banking centres  Onshore centres  Offshore centres  Onshore offshore centres

International finance The international banking market  Forms of activity on the market  International banking activity  American international banking  The globalisation of financial markets and international banking

International finance Forms of activity on the market  Correspondent banks  Representative offices  Subsidiaries and branches  Shell branches

International finance American international banking  Intesive activity on the offshore markets  International Banking Facilities  An enclave of the American banking market

International finance American international banking  The dominance of American international banking in the sector  Limitations to the banking activity  Limitation of foreign transactions financing

International finance American international banking  Edge Act  Edge Act corporations  Eclectic intitutions

International finance International banking and the globalisation of financial markets  Changing the activity profile of the banks  Deregulation  Technological progress  Innovations  Competitive pressure

International finance International banking and the globalisation of financial markets  Banking regulation vs. protection  Capital concentration  oligopolistic structure  Competing through „sevices quality”

International finance International banking and the globalisation of financial markets  Deposit guarantees  Lender of last resort  Subventions  Too big to fail

International finance International banking and the globalisation of financial markets  New services  The competition of investment funds  Shrinking area of banking activity  New banking strategies

International finance International banking and the globalisation of financial markets  Decrease of intermediation  Product diversification  New areas for banking activity

International finance International banking and the globalisation of financial markets  Banking corporations  Securitisation  Investment banking

International finance International banking and the globalisation of financial markets  Internationalisation of banks  International banking stategies  New risk management techniques

International finance International banking supervision  The goals:  Ensuring safe and effective payment settlements  Risk minimalisation  Ensuring international financial system stability

International finance International banking supervision  Environment of the regulation:  Financial markets globalisation  Non-banking institutions  Banking crises

International finance International banking supervision  The Basel Comitee  Recommendations  International banking supervision  Minimum prudential criteria

International finance International banking supervision  Basel I  Basel II  Basel III- work in progress

International finance Basel I  Banking supervision- international responsibility  Information exchange  The Cook indicator

International finance Basel II  Risk diversification  Operational vs. credit risk  Limiting regulatory arbitrage

International finance Basel II  3 pillars  minimum equity requirements  improvement of supervisory tools  market disciplne

International finance Basel II  The fiancial crisis  Frequent appliance of leverages  Securitised vs. notsecuritised products  Stressed value-at-risk

International finance Basel III  Increase of capital requirements  Common equity  Leverage indicator  Anticyclical equity buffer  Default risk limitation  Short term and medium term liquidity indicators

International finance Basel III  The too big to fail problem solved???  Banking liquidity  Preventing future crises???

International finance Basel III  Anticyclical regulations  The euro-area- specific conditions  Anticyclical regulations instead of anticyclical monetary policy

International finance Regulation in respective countries  USA  EU countries

International finance International banking regulation difficulties  Offshore banking  No deposit guarantees  No minimum reserve requirements  Diffuculties in supervision  Lender of last resort???

International finance International banking regulation difficulties  National regulations  Emerging markets  International non-banking institutions

International finance Summing up  International bankin as a part of the IMS  International banking activities  Specific role of the American international banking  Financial markets globalisation

International finance Summing up  The Basel Committee  Risk diversification  Changes of the regulations brought by the financial crisis

International finance References  E. Chrabonszczewska, L. Oręziak, Międzynardowe rynki finansowe, Oficyna Wydawnicza SGH, Warszawa 2000,  P. Krugman, M.Obstfeld, International economics: theory and policy, Pearson, Addison Wesley, Boston 2009,  K. Lutkowski, Finanse międzynarodowe. Zarys problematyki., PWN, Warszawa, 2007,  International framework for liquidity risk measurement, standards and monitoring, Basel Committee on Banking Supervision, BIS, 2010  Strengthening the resilience of the banking sector, Basel Committee on Banking Supervision, BIS, 2009.