Whether the public sector should be directly involved in financial intermediation is a controversial matter that continues to be strongly debated.1 A related issue that is equally important but has received less attention is whether public funding (or guarantees) to financial intermediaries should necessarily be supervised prudentially. Should official oversight be warranted, the question also arises of whether its objectives and modalities should be the same as for other types of financing. For example, while it is often taken for granted that all banking activities should be similarly supervised, the rationale for supervising second-tier public banks is not obvious. Moreover, the skills and methods involved in doing so are likely to be substantially different from those that apply to first-tier banks.

Case Studies in Technical Assistance