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Europe > Switzerland

You are looking at 1 - 5 of 5 items for :

  • Type: Journal Issue x
  • Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies x
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Cover IMF Working Papers
Bank Profitability and Risk-Taking
Natalya Martynova
,
Mr. Lev Ratnovski
, and
Mr. Razvan Vlahu
Traditional theory suggests that more profitable banks should have lower risk-taking incentives. Then why did many profitable banks choose to invest in untested financial instruments before the crisis, realizing significant losses? We attempt to reconcile theory and evidence. In our setup, banks are endowed with a fixed core business. They take risk by levering up to engage in risky ‘side activities’(such as market-based investments) alongside the core business. A more profitable core business allows a bank to borrow more and take side risks on a larger scale, offsetting lower incentives to take risk of given size. Consequently, more profitable banks may have higher risk-taking incentives. The framework is consistent with cross-sectional patterns of bank risk-taking in the run up to the recent financial crisis.
Keywords:
WP; interest rate; monetary policy; Banks; Risk-Taking; Bank Capital; Repo Markets; Crises; market-based investment; risky investment; investment X; side investment; project investment; Bank soundness; Accommodative monetary policy; Investment banking; Stocks; Global
Cover IMF Working Papers
Survey of Reserve Managers: Lessons from the Crisis
Aideen Morahan
and
Mr. Christian B. Mulder
This paper reports in detail on a survey that was circulated to reserve managing central banks of IMF member countries in April 2012. The survey aims to gain further insight into how reserve managers have reacted to the crisis to date. The survey also aims to understand how reserve managers arrive at their strategic asset allocation and how they operate their risk management frameworks in practice. Some of the key themes that emerge from the survey include potential procyclical and counter cyclical behavior by reserve managers, increased focus placed on returns and wide variability across countries in how the currency composition of reserves is derived.
Keywords:
WP; reserve manager; central bank; lower income country; yield; International Reserves; Foreign Currency Reserves; Official Reserves; currency composition; excess reserves; flight to quality; mechanisms well; currency risk; reallocation strategy; Currencies; Credit risk; Credit ratings; Reserves management; Global
Cover Building a More Resilient Financial Sector
Building a More Resilient Financial Sector
Reforms in the Wake of the Global Crisis
Mr. Aditya Narain
,
Ms. Inci Ötker
, and
Ceyla Pazarbasioglu

Abstract

The IMF, with the Bank for International Settlements and the Financial Stability Board, has been at the forefront of discussions on reform of the global financial system to reduce the possibility of future crises, as well as to limit the consequences if they do occur. The policy choices are both urgent and challenging, and are complicated by the relationship between sovereign debt and risks to the banking sector. Building a More Resilient Financial Sector describes the key elements of the reform agenda, including tighter regulation and more effective supervision; greater transparency to strengthen market discipline and limit incentives for risk taking; coherent mechanisms for resolution of failed institutions; and effective safety nets to limit the impact on the financial system of institutions viewed as "too big to fail." Finally, the book takes a look ahead at how the financial system is likely to be shaped by the efforts of policymakers and the private sector response.

Keywords:
BOOK; bank; market; financial system; authority; capital; market discipline; group structure; bank capital; parent bank; subsidiary structure; Systemic risk; Systemically important financial institutions; Bank resolution framework; Contingent capital; Commercial banks; Global; Europe; North America; Eastern Europe
Cover IMF Staff Position Notes
Redesigning the Contours of the Future Financial System
Ms. Laura E. Kodres
and
Mr. Aditya Narain
This paper explores the private- and public-sector responses to the crisis and some of the probable outcomes. Aside from improved supervision of individual institutions, greater emphasis needs to be put on financial regulations that reflect the systemic nature of financial risks and the role that macroeconomic policies play. Global consistency of regulation and financial sector taxation will be essential to mitigate systemic risks, avoid unintended distortions, and help ensure a level playing field. This note suggests the key aspects of the future contours will likely be: ? Banks are expected to return to their more traditional function as stricter regulation will limit the risks and activities they can undertake. ? The nonbanking sector will likely have a greater competitive advantage—both in supplying credit and providing investors with nonbank services—and will thus grow. ? The perimeter of regulation will need to expand to take into account risks in the nonbank sector. ? Market infrastructure will be reinforced to protect investors and will need to provide simplicity and transparency to make risks clearer and the financial system safer. ? The global financial system is likely to be smaller and less levered than in the recent past, and could well be less innovative and dynamic, at least for a while.
Keywords:
SPN; functioning financial system; economic growth; IMF policy advice; credit risk; banking sector; banking system assets; market discipline; financial system assets; CDS market; accounting rule; market practice; Commercial banks; Systemic risk; Financial sector stability; Credit; Nonbank financial institutions; Global
Cover IMF Staff Country Reports
Switzerland: Selected Issues and Statistical Appendix
International Monetary Fund
The Swiss banking system is characterized by a two-tier structure. The first tier is composed of the two large banks and some smaller banks focused on private banking, all of which have a significant international presence. These banks represent, so to speak, the “international face” of the Swiss banks. They are mostly joint-stock companies or privately owned (unlimited personal liability). The second tier is composed of a varied group of banks, mostly focused on domestic, or even regional, business.
Keywords:
ISCR; CR; asset; bank; cantonal bank; share; portfolio share; portfolio equity assets; foreign assets; asset characteristic; Foreign assets; Current account; Foreign banks; Current account surpluses; Investment banking; Global; Europe