Bezpieczny Bank

In the paper the author analyzes the functioning of the Federal Deposit Insurance Corporation – the deposit guarantee schemes operating in the financial sector of the USA. This institution, established in 1933, has always operated according to the risk minimizer formula. Acting as the deposit insurer, supervisory institution, resolution authority and receiver of failing banks, the FDIC possesses considerable experience. Such experience can be helpful for regulators from other countries building their deposit guarantee schemes or establishing comprehensive resolution frameworks.

The Emergency Liquidity Assistance (ELA) issue is not well elaborated in economic literature, also in Poland. Still, the possibility for a central bank to grant liquidity assistance for selected banks in a given country in the Eurozone deserves deeper attention, also in the area of a monetary policy framework within the EMU. In this context it seems to be important to analyze the Irish case and the specially created “bad bank” – IBRC. Because paying back the obligations of the IBRC to the Irish central bank became too costly for the Irish budget, financial engineering has been employed. The ELA in Ireland and its examination has led to the conclusion that this
instrument is not safe, especially for further integration of the Eurozone. Notwithstanding, financial engineering turned out to be a very helpful instrument from the point of view of public finances.

Cases of State aid directed at financial institutions were and are relatively frequent in times of crisis. Nevertheless, the bulk of aid taxpayer tunded aid during the harsh times commencing in 2008 in Europe has forced European decision-making entities to re-define the patterns of support and to reduce public commitments as well as to pass them on to shareholders, unsecured creditors and big depositors. The aim of this article is to indicate that despite such a qualitative shift there is and will be considerable room for manoeuvre for national authorities to pump additional public funds into failing banks thought to be systemically important. To bring up a range of different forms of a State support, the example of the British Royal Bank of Scotland is recalled and described. The intention of the author is to stipulate the circumstances where merely an “internal” rescue will not do, even after the creation of the Single Resolution Fund (the body the United Kingdom is not expected to join). And, in some externalities, national authorities would have the temptation to circumvent European law.

In the paper the authors discuss the factors impacting liquidity risk in the banking sector in Poland. The authors argue that the Basel III directive as it relates to liquidity measures is not adequate to keep liquidity in the long term. The lack of long term sources of funding, like covered bonds and mortgage securities, creates a high liquidity risk for banks in Poland. The authors indicate various
legal, economic and technical factors and barriers that need to be removed to create a market for long term securities, ensuring better bank liquidity in Poland. The discussed topic is connected to financing properties and mortgages, which are the majority of assets in bank balance sheets that result in issues with lack of liquidity. The authors’ identification, collection and presentation practical factors and challenges is the new contribution of the paper to the discussed topic. The stated research questions embrace certain postulates regarding the measurement of the relationship between the identification of the reasons for illiquidity and the
effects of implemented regulatory requirements. Another contribution of the paper is the application of conclusions drawn by the authors from theoretical analysis into the adjustments of the anticipated process and potential tools related to the long term sources of funding sources supporting the mitigation of liquidity risk in the banking sector in Poland.

As the fragmented net of unharmonized national DGSs in the EU failed to contribute to financial stability at an EU-level during the financial crisis, creating a pan‑European DGS seems to be a better solution. The author therefore proposes an optimal design of the third pillar of the banking union by analyzing the typical DGS features in the pan‑European context. Effective functioning of the SSM and the SRM are key prerequisites for establishing a pan‑European DGS successfully, based on gradual harmonization of national DGSs, along with pooling of funds. The design of a pan‑European DGS should also fulfill international recommendations in this respect.

The financial crisis that started in 2007 revealed serious deficiencies in existing solutions that were supposed to secure financial stability of the banking system not only in the EU but in the whole world. Thus there has been a need for an approach focusing on a stronger banking supervision system that would be equipped with tools and measures facilitating the implementation of new provisions in all member states of the EU as well as eradicating the recognized shortcomings in the banking supervisory framework.

New foundations for consolidated banking market supervision should be thoroughly considered since lack of transparency and overregulation are not likely to facilitate the process of restoring financial stability. So recognizing potential problems and their origins while drafting proposals for the changes to be impleme will possibly contribute first to a more efficient adoption of these provisions and second, if necessary, to easier amendment of the introduced framework.

The article focuses on the comprehensive examination of the competences of institutions operating since 2011 within the financial supervision architecture at an EU level, including a critical review of the new proposals (single supervisory mechanism within the banking union) to be implemented in 2014. Considerable emphasis is put on the role of the ECB in regulating and controlling the banking sector.