New Book Examines Legal Issues Affecting Central Banks in a Changing World
| Author | Pam Sak |
| Position | IMF Legal Department |
| Pages | 246-247 |
Page 246
The world banking industry is faced with a number of challenges in a rapidly expanding international financial environment. These concern derivatives, securitization, bank supervision, securities transfers, payment systems, the role of deposit insurance, and capital standards for market risk. These are among the subjects examined in Volume 4 of Current Legal Issues Affecting Central Banks, edited by Robert C. Effros of the IMF's Legal Department.
Two aspects of the IMF-its provision of financial assistance to its members and the determination of state succession in the IMF- distinguish it from other international organizations, according to François P. Gianviti, General Counsel of the IMF:
* Provision of financing. The IMF's assistance is intended to help member countries correct their balance of payments problems while avoiding recourse to exchange restrictions. Its financial assistance to members is subject to various legal rules, depending on the account from which the resources are derived.
* State succession in the IMF. In a review of cases involving changes in the legal status of members, Gianviti discusses the dissolution of Yugoslavia, which gave the IMF the opportunity to clarify its position on several issues of principle. For example, the IMF determines, for its own purposes, whether a member has ceased to exist and, therefore, has ceased to be a member of the IMF. If a finding of dissolution is made, the IMF identifies the successor states.
Sound bank supervision and regulation, together with appropriate early intervention, can prevent banking crises, but opinion is divided about where the supervisory authority may be most efficiently lodged. In most countries, the central bank is responsible for supervising commercial banks, but in some countries, a superintendent of banks or similar authority exercises this function. In the opinion of Ian H. Giddy of the New York University Stern School of Business, an independent agency is in the best interests of bank efficiency and depositor safety, because it "leaves the central bank free to concentrate on its proper function, monetary policy." Larry Promisel of the Board of Governors of the U.S.
Federal Reserve System argues...
To continue reading
Request your trial