How did some survive the storm?

Ever wondered, How did some countries with similar financial systems & regulations remain unaffected than others in the recent global financial crisis?

If we had to look into the reasons, we would come across many of them as time goes by. But one that is increasingly finding weightage with the decision makers is simply “Better Supervision”.

A recent IMF paper has highlighted some points on what makes your supervision better and how can countries identify them at the right time?

1. Supervision is indiscreet: Supervision is something which cannot be outsourced or judged upon from looking at the offsite analysis only. Supervisors should not be looked at as remote observers; instead their presence should be continuously made felt.
2. Good supervision is proactive: Supervisors must question even in good times, the industry’s actions and directions, as it helps draw a clear picture on the future steps that need to be adopted.
3. Good supervision is comprehensive: Even while recognizing the limitations of their scope, supervisors should be constantly updated about the happenings so that they are aware of threats, risks which may have key implications.
4. Good supervision is Adaptive: Financial sector is constantly evolving and innovating, it becomes very important for the supervisors to be exploring the new markets, new services etc so that the risks can be understood and responded to appropriately.

The two most critical elements that support great supervision are the ability and the will to act with a sense of deep understanding of the financial markets, in terms of operational independence, accountability and healthy relationship with the industry.

Source: Economic Times