Social and Behavioral Sciences Commons^™

How Might Financial Market Information Be Used For Supervisory Purposes? By J. Krainer & J.A.Lopez, Federal Reserve Bank Of San Francisco Economic Review 2003: A Review. ., P. N. Omanukwue

Economic and Financial Review

Banking services are extremely important, especially in a free market economy. However, in spite of banks catalytic role in the transmission mechanism of monetary policy, they are exposed to a lot of risks, such as liquidity, operational, market and credit risks, among others. To guard against such risks, most economies have created public safety nets as well as banking supervisory agencies and institutions of various forms to protect both the depositors and other banks/shareholders from systemic shocks that could destabilize the system. In the conduct of its supervisory functions, most central banks adopt an on-site and/or an off-site monitoring system, …