Conference on European Economic integration
Transcript of Conference on European Economic integration
Conference on European
Economic integration
Katia D’Hulster
Senior Financial Sector Specialist
Question 1
What does the World Bank do to make
CESEE more resilient?
Financial Sector Advisory Center (FinSAC)
Objective:
“to help ECA financial regulators strengthen financial stability”
How?
• Tailored Technical Assistance
• Analytical output
• Regional conferences and workshops
Geographic focus
Authorities from
EU candidates
and potential
candidates
EU member
states
EU neighboring
countries
Central Asian
countries
Thematic focus
Four pillars
Macro prudential
Micro prudential
Recovery &
Resolution
Consumer Protection
and Financial Literary
Question 2
What remains to be done to remove
financial sector legacies that result
from the downturn of the financial cycle
since 2008?
Pillar 1: Macro prudential framework
Institutional
Policy tools
Capacity building
Crisis preparedness
Pillar 2: Micro-prudential framework
NPL reduction
CRD IV
Information sharing
NPL ratios in SEE: high and/or rising,
with the possible exception of Kosovo Bank Nonperforming Loans to Total Loans, %
0
5
10
15
20
25
30
Q1
-07
Q2
-07
Q3
-07
Q4
-07
Q1
-08
Q2
-08
Q3
-08
Q4
-08
Q1
-09
Q2
-09
Q3
-09
Q4
-09
Q1
-10
Q2
-10
Q3
-10
Q4
-10
Q1
-11
Q2
-11
Q3
-11
Q4
-11
Q1
-12
Q2
-12
Q3
-12
Q4
-12
Q1
-13
Albania
Bosnia
Bulgaria
Croatia
Kosovo
Macedonia, FYR
Montenegro
Romania
Serbia
Source: IMF FSI and national authorities NPL definitions not directly comparable
NPL RESOLUTION -- ROAD MAP
Pillar 3: Recovery and Resolution
Underfunded deposit insurance regimes
Legal uncertainty remains
Untested bank resolution frameworks
Pillar 4: Consumer Protection & Financial Literacy
Legal and regulatory frameworks
Institutional arrangements
Information disclosure
Dispute resolution
Financial education
Question 3
What are your thoughts on the policy
responses across the EU and their
implications for CESEE?
Overall
• Slow process, regular slippage in timelines
• “Third countries”
• Tensions between home and host interests
remain
• Many authorities will remain in charge of
banking supervision
• Asset quality review
Banking Union Sequencing of integration
Instruments and powers
Responsibility
Territorial approaches as a result of sequencing of integration
Single Rule Book
Single supervisory mechanism
Single Resolution mechanism and fund
Single deposit protection
Fragmentation
Key challenges
• Macro-prudential frameworks not yet fully functioning
• Mechanisms for reducing the stock and flow of NPLs are not yet fully in place
• Loan classification and provisioning requirements will eventually need to become more standardized
• Impact of CRD IV to be estimated and buffers to be implemented
• Bank resolution authority and deposit insurance schemes are in process of being modernized