- William Alexander, Jeffrey Davis, Liam Ebrill, and Carl-Johan Lindgren
- Published Date:
- August 1997
© 1997 International Monetary Fund
Cover design by IMF Graphics Section
Library of Congress Cataloging-in-Publication Data
Systemic bank restructuring and macroeconomic policy / editors, William Alexander … [et al.].
Includes bibliographical references.
1. Banks and banking. 2. Banks and banking—Government policy I. Alexander, William E. (William Edward), 1936–
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Many member countries of the International Monetary Fund, in response to systemic banking sector problems, have restructured their banking system in the last two decades and others are doing so now or may need to do so in the near future. Just as weak banking systems affect domestic and global stability and growth, so does their restructuring. Because governments typically bear a major share of the heavy burden of financially restructuring banking systems, the budget and its medium-term sustainability are also affected. The IMF, with its near-global membership, has thus a vital interest in ensuring sound banking systems. We believe this book, which builds on cross-country restructuring experiences and the foundation laid by its predecessor, Bank Soundness and Macroeconomic Policy, represents an important addition to the literature. It examines from a global and macroeconomic perspective systemic bank restructuring but it also emphasizes that systemic bank restructuring requires detailed, micro-level, restructuring of individual banks.
The country experiences on which this volume is based bring forth broad principles and actions to guide policymakers in restructuring their banking systems: (1) formulation of comprehensive policies and prompt implementation once banking problems are detected; (2) maintenance of macroeconomic stability during systemic bank restructuring through a coordinated and substantial policy response; (3) minimization and transparent recording of government financial support to prevent future moral hazard problems; and (4) operational restructuring of individual banks and, typically, reconfiguration of the operating environment and the structure of the banking system. The tax treatment of banks, especially of their loan losses, may also need to be reformed.
While immediate responsibility for keeping individual banks sound lies, of course, with their owners and managers, national authorities will typically need to take the lead in restoring soundness to their banking system. At an early stage, IMF surveillance can be a useful vehicle for alerting members to weaknesses in their banking systems and supervisory regimes, for encouraging countries to adopt a framework for sound banking, including guidelines developed by the supervisory community, and for assessing progress to that end. But where systemic banking problems have surfaced and bank restructuring is being planned or is under way, there is also an important supporting role for international agencies. In this regard, the World Bank and regional development banks are well placed to provide advice and support on microeconomic and operational aspects of bank restructuring. For its part, the IMF will likely be involved in assisting the authorities in their efforts to deal with the macroeconomic consequences of restructuring. Well-coordinated advice and support from the international institutions can thus represent a big contribution to country efforts to address systemic banking problems.
|Manuel Guitián||Vito Tanzi|
|Monetary and Exchange Affairs Department||Fiscal Affairs Department|
|International Monetary Fund||International Monetary Fund|
This book is a joint product of the Fiscal Affairs Department (FAD) and the Monetary and Exchange Affairs Department (MAE) and arose from the need to advise countries on how to deal with banking system problems and on how to consistently incorporate the macroeconomic aspects of systemic bank restructuring into IMF policy advice and IMF-supported adjustment programs.
The authors are grateful to colleagues in FAD, MAE, and other departments, for suggestions on earlier drafts. Manuel Guitián, Director of the Monetary and Exchange Affairs Department, and Vito Tanzi, Director of the Fiscal Affairs Department, strongly supported the project. Guidance and comments from Peter S. Heller and Malcolm Knight are particularly acknowledged. The principal contributors to individual chapters are James Daniel, Claudia Dziobek, Julio Escolano, Gillian Garcia, Ceyla Pazarbaşioḡlu, and Matthew Saal. The operational and practical experiences of Arne Berggren and Peter Nyberg with systemic bank restructuring provided invaluable contributions to MAE’s early work on transition economies. Background country studies were prepared by Guzel Anulova, Sara Bertin-Levecq, Luis Cortavarria, John Leimone, Ian Lienert, Michael Mered, Beatrice Weder, Jan Willem van der Vossen, and Andrew Wolfe (who also contributed to the chapter on fiscal transparency). The views expressed are those of the authors and should not be interpreted as those of the IMF.
Secretarial assistance was provided by Purisima Anderson, Noella Eanos, Lyndsey Livingstone, Elsa Portaro, Lisa Scott-Hill, Janet Shelly, Ramanjeet Singh, and Lidia Tokuda and research assistance by Kiran Sastry. James Daniel, with Heather Huckstep’s secretarial assistance, prepared the final manuscript for publication. Juanita Roushdy of the External Relations department gave the manuscript a final edit and coordinated publication.
William E. Alexander
Jeffrey M. Davis
Liam P. Ebrill
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