1. Lessons from the Crisis for International Financial Surveillance
Dimitri G Demekas
Assistant Director
Monetary & Capital Markets Department, IMF

2. Lessons from the crisis
What have SE European countries learned?
International financial surveillance
What has the IMF learned?

3. Lessons from the crisis
Financial regulation
Macroeconomic policies
Global financial architecture
Initial Lessons from the Crisis (
Lessons from the Crisis for Future Regulation (
Lessons of the Crisis for the Global Architecture (
Lessons of the Global Crisis for Macroeconomic Policy (

4. Lessons from the crisis I
Financial regulation
Perimeter (regulation, information)
Procyclicality (accounting, regulation)
Prudential rules (capital requirements, liquidity, risk management, macro-prudential factors)
Corporate governance practices (information disclosure, executive compensation)

5. Lessons from the crisis II
Macroeconomic policy
Bubbles
Leverage
Countercyclical policies: macro only or macro-and-prudential?

6. Lessons from the crisis III
Global financial architecture
Cooperation in regulation, bank resolution, systemic liquidity
Improved surveillance, especially of systemically important countries
IMF governance and mandate

7. What lessons matter for SE Europe? What have we learned from SE Europe?
Procyclicality in policy and regulation
Capital requirements, liquidity rules
The importance of leverage
Regional contagion, regional cooperation

8. International financial surveillance: What has the IMF learned?
IMF surveillance instruments:
Multilateral surveillance (WEO, GFSR)
Bilateral surveillance (Article IV consultation)
Financial Sector Assessment Program (FSAP)

9. Better tools, greater flexibility
Greater focus on crisis preparedness crisis management frameworks
Improved stress testing techniques
Emphasize data gaps/caveats
Focus on liquidity risks
Capture cross-market, cross-country exposure
More flexible FSAPs
More focused “modular” stability assessments, higher frequency

10. New forms of IMF engagement
European Bank Coordination Initiative
Cooperation with FSB and financial sector standard-setters (EWE, revisions to standards)
Input to FSB and G-20 “peer reviews”
New forms of multilateralism?

11. Thank you

12. Standard capital inflow surge financing an investment and growth boom…

13. …while macro policies were insufficiently countercyclical…

14. … and prudential rules were procyclical.
Higher profitability: lower provisioning
Higher growth: lower provisioning

15. The importance of capital and liquidity buffers
Croatia’s “unorthodox” measures
Marginal reserve requirement on foreign borrowing by banks at 55%
Reserve requirement at 17%
Fx liquid asset requirement at 32%
Credit controls
…did not help slow credit growth, but provided buffers when the crisis hit
eliminated
reduced to 14%
reduced to 20%

16. The importance of leverage

17. Regional aspects of the crisis
CESE: Asset share of foreign-owned banks, in percent
TSI
TMO 12 12 12
T-Com

18. Regional aspects of the crisis
RAIF = Raiffeisen; ERST = Erste; UNIC = Unicredit; ISP = Intesa Sanpaolo; SG = Societe Generale

19. European Bank Coordination Initiative