In a recent paper entitled "Under Pressure: Taking Stock of Supervisory Resources," the Basel-based Financial Stability Institute (FSI) reports on the results of its study comparing supervisory staffing and budgets to total banking sector assets in 57 jurisdictions. The FSI found that banking supervisors in major financial centers face substantial resource constraints.
"While technology can certainly help increase its productivity, banking supervision is inherently labour-intensive," the FSI's Rodrigo Coelho and Rebecca Guerra write in the report. Although supervisors of globally systemically important banks (G-SIBs) have more staff and bigger budgets, jurisdictions without G-SIBs tend to allocate more resources relative to total assets.
Emerging markets often have proportionally larger staff pools and budgets than those in advanced economies. Perhaps unsurprisingly, supervisory bodies that can levy penalties on firms also tend to have more financial resources. "In contrast, authorities relying exclusively on funding from the government will likely face fiscal constraints," they explain.
The authors highlight the crucial role of supervisors in safeguarding financial stability, emphasizing the need for adequate resources to mitigate the societal costs of financial crises and protect broader economic interests. "It is, therefore, imperative not only from a financial stability perspective but also from a broader economic standpoint for public authorities to ensure that banking supervisors have adequate resources to properly fulfil their responsibilities," the report reads.
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