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Large and Complex Financial Institutions: Challenges and Policy Responses: Lessons from Sweden
Author:
Mr. R. B. Johnston
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,
Mr. Balázs Horváth
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Mr. Luca Errico
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, and
Ms. Jingqing Chai
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Series:
IMF Policy Discussion Papers
Volume/Issue:
Volume 2003: Issue 001
Language:
English
Publication Date:
01 Mar 2003
DOI:
https://doi.org/10.5089/9781451975031.003
ISBN:
9781451975031
ISSN:
1564-5193
Pages:
25
Keywords:
PDP; Swedish LCFIs; financial institution; solvency support; financial institution solvency; market discipline; Large and complex financial institutions; moral hazard; policy lessons; LCFI operations; systemic importance; business name; market confidence; LCFIs active; LCFI's banking; Stress testing; Financial sector; Baltics
Legal-disclaimer:
This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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This paper examines the regulatory and supervisory implications stemming from the dominance of large and complex financial institutions, drawing on the recent Financial Sector Assessment Program (FSAP) mission work on Sweden. The analysis highlights the importance of consolidated supervision, of a greater emphasis on effective management and corporate governance structures, and of measures strengthening the disciplinary role of the private sector. It calls for developing credible liquidity and crisis management arrangements through appropriate attention to the cross-product and cross-border nature of large and complex financial institution (LCFI) operations. Strengthened supervisory and regulatory responses will enable financial markets to better assess the nature and sources of residual risks they have to face and, on this basis, to develop more effective risk-mitigating measures.
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Cover IMF Policy Discussion Papers
IMF Policy Discussion Papers
ISSN:
1564-5193
Publisher:
International Monetary Fund