ECB's José Manuel González-Páramo presented the role that central banks will have in the new international financial architecture in safeguarding financial stability.
José Manuel González-Páramo, Member of the Executive Board of the ECB, presented the role that central will have in the new international financial architecture. He said that “the recent financial market crisis has highlighted the important role that central banks play in safeguarding financial stability and the need to increase interaction between central banks and banking supervisors.”
Regarding financial stability assessment he highlighted that
: “central banks can benefit from extended access to supervisory information especially in relation to systemically relevant institutions, in order to identify risks and vulnerabilities for the financial system as a whole in a more efficient way. In this context, the FSB and the International Monetary Fund are already intensifying their cooperation with a view to enhancing the assessment of financial stability risks on a global scale, while in the EU the same is valid for the Banking Supervision Committee and the Committee of European Banking Supervisors.”
In the area of crisis management and resolution he remarked that “ the global nature of financial markets and the increased interlink ages between markets and institutions requires competent financial authorities, central banks, supervisors and ministries of finance to strengthen their coordination mechanisms for the management of crisis involving cross-border financial institutions. In the EU, an important milestone has been reached with the Memorandum of Understanding (MoU) signed by the competent authorities of all Member States in June 2008. This MoU establishes common principles, procedures and terminology to be used by all parties involved in a cross-border crisis.”
To conclude he added that “despite the efforts done, the light at the end of the tunnel is still no here and key financial markets and economic sectors remain under stress. It will be very difficult to predict when exactly the economies will return to normality, but when this finally happens, the world will look different in many respects.”
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