The agreement aims better to coordinate banking sector regulation and supervision and to contain negative spillovers between the euro area and emerging Europe. It emphasises the central role of European institutions and the international financial institutions in facilitating this coordination.
The meeting this week in Brussels outlined responsibilities for key stakeholders, specifically with a view to improving ex-ante coordination. The European institutions should play a central role in supervisory coordination, macro-prudential oversight and mediation among national authorities. International Financial Institutions (IFIs) should support the implementation of the agreed principles by their involvement in surveillance, data collection, policy advice and financial support.
The Full Forum also considered the reports of its two Working Groups, one on the impact of Basel III rules on emerging Europe, and the other on the resolution of non-performing loans (NPLs). The report on Basel III highlights a number of implications of the new rules for emerging markets, particularly in the liquidity management area, and offers several recommendations to address them. The report points out that future regulation and calibration should take better account of the emerging market perspective and market development needs.
The report on NPLs finds that possibilities exist for stimulating resolution to support recovery. The Working Group on the resolution of NPLs calls for a pro-active cooperative approach to deal with the NPL problem with distinctive roles for each stakeholder: the relevant country authorities should press ahead with removing the burdensome regulatory, tax and legal impediments to NPL resolution identified in the report; regulators should tighten supervision appropriately to eliminate incentives to let NPLs linger; banks should step up their collective effort to speed up NPL resolution; and avenues for out-of-court debt restructuring and corporate rehabilitation negotiations between debtors and creditors should be explored.
The reports were adopted and will shortly be made public on the websites of the participating IFIs and the European Commission. The participants commended the reports’ high quality that reconfirms the usefulness of the EBCI’s private-public platform in analysing and informing policy-makers of region-wide systemic issues.
Press release
© International Monetary Fund
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