| List of Figures | p. x |
| List of Tables | p. xii |
| Foreword | p. xiii |
| Acknowledgements | p. xvi |
| The Regulation of Financial Institutions | |
| The Evolving Role of Regulators in the Banking Industry | p. 3 |
| Introduction | p. 3 |
| A closer look at the regulators' role and their contribution | p. 4 |
| The expanding notion of regulating the markets in an Internet setting | p. 8 |
| The synergy of credit risk and market risk | p. 11 |
| The information economy and the role of global networks in finance | p. 14 |
| The phase shift in the market calls for new regulatory policies and procedures | p. 18 |
| Regulating the partnership between credit institutions and hedge funds | p. 20 |
| The Search for a New Global Financial Architecture | p. 23 |
| Introduction | p. 23 |
| The doubts arising from disfunctioning rules and markets | p. 24 |
| Reflections on a new global financial architecture | p. 27 |
| The moral hazard posed by a fire-brigade approach | p. 32 |
| There is a synergy between monetary policy, exchange rates and bank supervision | p. 35 |
| The deposit insurance solution in America which could serve as a model | p. 38 |
| The Federal Reserve System provides a good background for restructuring the IMF | p. 40 |
| Systemic Risk, Bank Supervision and Follow-the-Sun Overdraft | p. 46 |
| Introduction | p. 46 |
| Reasons underpinning systemic risk | p. 47 |
| The follow-the-sun overdraft | p. 51 |
| Systemic risk as a result of subprime lending by financial markets | p. 53 |
| Coping with liquidity risks without igniting inflation | p. 56 |
| The model of the Resolution Trust Corporation and the avoidance of systemic risk | p. 59 |
| Structuring the Regulatory Environment: Examples from the United States | p. 63 |
| Introduction | p. 63 |
| From the Sherman Act for free trade to rules targeting the control of risk | p. 64 |
| Establishing rigorous rules for risk disclosure | p. 67 |
| The difficult act of regulating the over-the-counter market | p. 69 |
| The changing regulatory landscape in the USA | p. 72 |
| Private Securities Litigation Reform Act of 1995 | p. 74 |
| Changes in Bank Legislation: Examples from Germany | p. 77 |
| Introduction | p. 77 |
| Changes to the German Banking Act and their consequences | p. 78 |
| The redefinition of specific duties through the Sixth Act Amendment | p. 80 |
| The prudential value of information on loans | p. 83 |
| The contribution of the Sixth Act Amendment to the introduction of the euro | p. 86 |
| Other challenges connected to the euro, the ins and the pre-ins | p. 88 |
| The Many Aspects of Bank Supervision | |
| Hands-On Experience with Bank Supervision | p. 93 |
| Introduction | p. 93 |
| A closer look at the different supervisory models in G-10 countries | p. 95 |
| Common elements in the supervision of banks and public companies | p. 98 |
| Financial examination programmes: on-site auditing versus monitoring | p. 100 |
| Benefits derived from a collaborative effort in banking supervision | p. 103 |
| The risk of conflicting rules and regulations | p. 105 |
| The Integration of Supervisory Duties by the Financial Services Authority: An Example from Britain | p. 110 |
| Introduction | p. 110 |
| Understanding the fact that regulation is in full evolution | p. 111 |
| Fundamental changes in the Financial Services and Markets Bill | p. 114 |
| The new powers of the Financial Services Authority | p. 116 |
| The Financial Services Authority and the role of regulators in controlling risk | p. 118 |
| The supervisory scrutiny of poor management practices | p. 120 |
| Cross-Border Supervision of Banks, Non-Banks and Internet Commerce | p. 124 |
| Introduction | p. 124 |
| Cross-border supervision, internet commerce and knowledge management | p. 125 |
| Day trading, technology and the global market place | p. 128 |
| An example using emerging products: the valuation of Internet stocks | p. 132 |
| A horde of issues: from financial engineering to fees rewarding inefficiency | p. 135 |
| Hedge funds, junk funds and big losses | p. 137 |
| Should the hedge funds industry be regulated? | p. 139 |
| Rigorous Approaches to the Management of Financial Risk Factors | p. 142 |
| Introduction | p. 142 |
| The strategic importance of risk management with derivative financial instruments | p. 143 |
| The monitoring and reporting of derivatives risk | p. 145 |
| Critical questions in analysing the options book | p. 148 |
| Regulatory action and the Year 2000 problem | p. 151 |
| Supervisory authorities which have been alert regarding Year 2000 exposure | p. 155 |
| Model Risk and the Control of Eigenmodels by the Supervisors | p. 158 |
| Introduction | p. 158 |
| The challenge modelling solutions pose to regulators and to the bank's own board | p. 159 |
| Basic notions to keep in perspective when modelling the real world | p. 162 |
| Errors in financial modelling and model risk | p. 166 |
| The control of eigenmodels by the Swiss Federal Banking Commission | p. 167 |
| Regulation of eigenmodels by the Austrian supervisors | p. 170 |
| The Capital Base of Financial Institutions | |
| Rethinking and Revamping the 1998 Capital Accord: A New Capital Adequacy Framework | p. 175 |
| Introduction | p. 175 |
| The flat 8 per cent capital adequacy by the Basle Committee and its challengers | p. 176 |
| A New Capital Adequacy Framework by Basle Committee on banking supervision | p. 179 |
| Enriching the supervisory review of Capital Adequacy through external and internal rating | p. 182 |
| Diversification is good, other things being equal | p. 185 |
| Why capital reserves, risk profiles and prudent management correlate | p. 188 |
| The Capital Adequacy Directive of the EU | p. 191 |
| The brewing regulation of commodity trades and the association with the Investment Services Directive | p. 195 |
| Six basic reasons for the revision of CAD | p. 197 |
| Central Banks, Commercial Banks and Repurchase Agreements | p. 200 |
| Introduction | p. 200 |
| Basic features of sales and repurchase agreements | p. 201 |
| Using repurchase agreements for going short and for other trades | p. 203 |
| The valuation of securities owned and securities sold | p. 205 |
| Regulatory and accounting practices connected with securities lending | p. 207 |
| Is there a dividing line between custodian duties and repurchase agreements? | p. 210 |
| Redefining Reporting Requirements and Opening New Frontiers | p. 212 |
| Introduction | p. 212 |
| Are there critical differences between the British, American and Swiss Regulatory Requirements? | p. 213 |
| Working Parties and the Gordian Knot cut by the Swiss National Bank | p. 217 |
| Concepts underpinning the Bundesbank's Mindest Anforderungen fur Handelsgesellschaften and the cash flow method | p. 220 |
| Using simulation, experimentation and public pricing information for compliance with the rules | p. 223 |
| Policy risk, choice of hedging and extreme events in wealth management | p. 226 |
| Regulators and the Wave of Mergers in Banking | p. 230 |
| Introduction | p. 230 |
| A bird's-eye view of mega bank mergers | p. 231 |
| Some merged institutions tend to create second-class clients | p. 236 |
| The aftermath of Citigroup and other mergers | p. 240 |
| Bank mergers in Canada and in Europe | p. 243 |
| After the shock: the cost of the savings and loans failure | p. 246 |
| Debt Management Strategies and the Restructuring of Assets and Liabilities by Sovereigns | p. 249 |
| Introduction | p. 249 |
| The global impact of debt management policies | p. 250 |
| Who are the watchdogs for government deficits? | p. 253 |
| Positioning the national economy against the globalisation forces | p. 256 |
| The effort to privatise the public debt | p. 259 |
| Are investments in equities by governments a good solution? | p. 263 |
| Index | p. 267 |
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