European credit institutions are expected to pile up a relevant amount of non-performing loans (NPLs) as a consequence of the crisis provoked by the Covid-19 pandemic. Against this backdrop, one of the most critical issues at stake is whether credit institutions currently hold an amount of...

The economic and financial crisis of the year 2008 highlighted the need for banking sector regulation via the creation of the banking union. The Bank Recovery and Resolution Directive (BRRD) represents an important milestone in the formation of the banking union. It is supposed inter alia to...

The coronavirus has produced a public health debacle of the first-order. But the virus is also propagating the kind of exogenous shock that can precipitate – and to a considerable degree is already precipitating – a systemic event for our financial system. This currently unfolding systemic...

The paper provides the IMF staff views on policy options to mitigate the risks posed by institutions perceived as too-important-to-fail (“TITF"). These institutions have become bigger and more complex since the crisis, and risky practices have started to reappear. The paper emphasizes the need...

This written testimony was presented on April 26, 2007, at a hearing on "Credit Card Practices: Current Consumer and Regulatory Issues," before the Subcommittee on Financial Institutions and Consumer Credit of the U.S. House of Representatives Committee on Financial Services. The testimony...

After summarizing the broad lines of the new Single Supervisory Mechanism (SSM) for credit institutions in the European Union, the author deals in his contribution with some specific issues that have generated controversy, such as the criteria to select the credit institutions supervised by the...

This study aims to develop a financial stability index for the Pakistani financial sector by using the financial reports for the period of 2001–2011. Specifically, we constructed three different classes of indices in this study based on a variance-equal weighted approach, a linear probability...

There are frequent calls for financial markets to be more actively regulated by state agencies, such as the Financial Conduct Authority or the Prudential Regulation Authority. They reflect neo-classical, market-failure approaches to economics, which suggest that the market does not maximise...

Recessions associated with banking crises are deeper and longer than other recessions. While banking crises are often believed to reflect defects in regulation and supervision, regulatory and supervisory frameworks may also determine the shape of subsequent recoveries. Combining new databases...

We reverse engineer dynamics of financial contagion to find the scenario of smallest exogenous shock that, should it occur, would lead to a given final systemic loss. This reverse stress test can be used to identify the potential triggers of systemic events, and it removes the arbitrariness in...