Guidance to Assess the Systemic Importance of Financial Institutions
To inform the preparation of the paper, country authorities were surveyed on their experiences with identifying systemically important institutions, markets and instruments. Feedback on an initial draft questionnaire, coordinated by the IMF, FSB and BIS, was sought from counterparts at several central banks (see Attachment). The finalized questionnaire was subsequently sent out to the central banks of G-20 and FSB members, plus a few other countries which are widely recognized as key home/host countries to important international banks; in all, the survey was sent to 27 central banks. The survey was also sent to the supervisory and regulatory standard setters-the Basel Committee on Banking Supervision (BCBS), the International Association of Insurance Supervisors (IAIS) and the International Organization of Securities Commissions (IOSCO)-for their information and possible responses from their respective members. The survey is provided as Appendix I.
- The survey comprised quantitative and qualitative components. On the quantitative side, countries were asked to indicate if a particular sector is systemic, and whether individual institutions in that sector are systemic. They were then asked to rank the five most important factors contributing to their classification of systemic relevance, both before and after the onset of the current crisis. The qualitative aspect was made up of three parts: (i) how countries assess systemic relevance; (ii) the design of a framework to assess systemic relevance; and (iii) where relevant, how financial crises have informed approaches to identifying systemic relevance.
- Completed surveys were received from all the central banks to which they were sent, representing a 100 percent response rate. In some countries, where the financial supervisory role is also performed by the central bank, responses to the survey were coordinated between the financial stability analysis and supervisory functions. In one case, the central bank had shared the survey with the supervisory agency, which prepared a separate response. Responses were also sent directly from the supervisory agencies of two countries. In all, 30 separate responses were received to date (Table 1).
- Countries typically provided comprehensive responses to the survey. Most countries provided answers to both the qualitative and quantitative components; six countries preferred not to rank the factors contributing to the systemic relevance, citing the difficulty of any ex ante assessment, which is largely attributable to the state-dependent nature of systemic relevance and the lack of formal definitions of what constitutes systemic importance.
- This chapter is organized as follows. Section B presents and analyzes countries' identification of the main systemically important entities in their financial systems, and the relevant systemic factors contributing to their classification. A summary of the discussion by 4 respondents on the identification of systemic relevance and on the design of a framework to assess systemic relevance are presented in Section C. Continue reading