Safe Bank

Supervision of the financial markets has become over the last twenty years or so, an increasingly important element of the financial system. It is progressively moving away from passive compliance checks, towards becoming a real and active influence of the financial markets. It is encompassing a growing range both of issues and entities and is undertaking an ever-deeper insight. Financial supervision is also increasingly acquiring regulatory powers through the extensive application of self-produced ‘soft’ regulatory norms as well as accumulation of resources. (proliferating particularly after the recent global financial crisis). The goal of this article is to provide a systematic review of principal challenges currently facing financial supervision. The article is split into three parts. Its first part discusses the theoretical foundations of the supervisory system trying to indicate the sources of its powers, including its societal role. It deserves more attention in view of the unprecedented powers acquired by supervisors over supervised institutions and the financial markets. In the second part we take a close look at the changing supervisory paradigm in its current form. The third part reviews the new challenges facing financial supervision in its search for innovations which adapt to new requirements, and the available opportunities in the development of its new toolkit.

A common theme in recent public European Union (EU) policy debates is improving integration of the EU financial sector. The suggestion is that the Euro area should be treated as if it were a single jurisdiction, across which banks should be able to centralise management of capital and liquidity. Financial fragmentation is said to trap capital and liquidity in local subsidiaries in Host countries which is suboptimal, hindering the cross-border provision of credit, and resulting in an inefficient economic allocation, with higher costs for customers, and lower profitability for the industry in the EU. The proposed policy involves measures to counteract ring-fencing of subsidiaries by Member States (MS), curtailing national options and discretions that limit the harmonization effects of the EU’s Single Rulebook, and other regulations and supervisory practices that reduce banking groups’ cross-border freedom. However, some of the national options affecting banks in the EU are still supported by MS as needed due to local risks, financial stability concerns.
Cross-border banking, often used as a yardstick to gauge the level of financial integration in the EU, can currently be realized in the EU in three basic forms: via subsidiaries, via passported branches or via cross-border provision of services. Among the solutions to fragmentation that many EU policy makers and governments focus on, at least in the Eurozone (EZ), are: completion of the Banking Union (BU), adopting regulations allowing capital, liquidity and MREL waivers in subsidiaries across borders, and the reduction of national options.
In November 2016, the European Commission (EC) proposed changes to Capital Requirements Regulation (CRR), Capital Requirements Directive IV (CRD IV) and Bank Resolution and Recovery Directive (BRRD) which would have allowed, under certain conditions (e.g. subject to guarantees), the application of capital, liquidity and MREL (Minimum Required Eligible Liabilities) waivers in the subsidiaries of EU banks operating in EU MS. These propositions faced strong opposition and were not ultimately adopted in the recently published CRR 2.0, CRD V and revised BRRD, due to lack of consensus among MS. But the arguments in favour of change have not disappeared.
In this paper, we start with a look at the current state of financial integration in Europe. We then examine the arguments for and against the use of waivers. Building on these arguments, we subsequently explain sensible preconditions that should be put in place – in addition to completing the BU – to allow the prudent use of such waivers. We also discuss alternatives to the use of waivers, based on expanding the use of branches and indicate incentives which can play a role in shaping the quality of cooperation between Home and Host supervisors.

Companies from the innovative technologies sector implement their solutions on the financial market. Their dynamic development is, amongst other things, caused both a loss of trust in traditional financial market entities and a change in consumer preferences related to the increasing use of financial services through electronic banking, specifically mobile banking. These trends, as well as legal regulations (e.g. the PSD2 Directive), and also the possibility of obtaining banking licenses by FinTech, have led to revolutionary changes on the financial markets. This is why there is a great challenge for central banks in the regulation and constant monitoring of entities from the FinTech sector that provide financial services. In connection with these changes, a survey was conducted among central banks asking them for opinions on the FinTech sector. As part of the research, numerous opinions were obtained which according to central banks indicate, among others, on:
• the positive impact of the FinTech sector on the banking market
• the need for cooperation between the banks and the FinTech sector, rather than establish competition
• the specific analysis of cybernetic risk as a threat due to the growing scale of FinTech’s operations

The article addresses new risks in the financial sector connected with climate change. With greenhouse gas emissions, temperatures will continue to rise and thus increase the financial risk arising from the physical consequences of climate change. The prevention of such consequences will increase the financial risk of the transition to a low-carbon economy, and will lead to changes in business models, to the phenomenon of stranded assets, etc. At the same time, the growing awareness of the need to prevent further climate change and to adapt to the changes already happening intensifies the pressure of various entities and environments on the financial sector to become involved in such activities, and to run its business responsibly and in accordance with the sustainable development concept. All this opens the financial sector to new risks (in addition to the physical risk and the transition risk), in the management of which it has no experience. Both the hedging and especially the materialisation of such risks will affect the stability of the financial sector. Moreover, such new conditions in the functioning of the financial sector, caused by climate change, generate new obligations and challenges for regulators and financial supervisors.

The objective of this paper is to identify the determinants of reputation of the banking sector in Poland and to segment the society according to the factors that shape the reputation. Banks in Poland have a good reputation. The factors of a good reputation are in clear advantage over the factors of a bad reputation. The most important things in shaping the banks’ reputation are the axiological determinants. Their significance is three times as high as the effectiveness determinants linked to the satisfaction with the banking services, and it is much higher than the impact of the normative determinants connected with the institutional aspects of the banking sector. The three selected homogeneous typological groups of consumers differ from each other in terms of normative, axiological and altruistic determinants that shape the reputation. The effectiveness determinants do not diversify the consumers in terms of their impact on the the banks’ reputation assessment. The most important touch points that shape the banks’ reputation are: consumers’ personal experience, customer service attendants in the banks, friends’ opinions as well as the opinions of the people who are regarded by the consumers as experts. When modelling the reputation determinants, a structural equation modelling method (SEM) was used. Studies were carried out on a nationwide representative sample of N=1000 residents of Poland using the CAPI method in March 2019.

The rapid pace of change in economic phenomena combined with the high volatility of financial markets and the growing importance of irrational behavioral factors, encourages a wider use of expert knowledge in macroeconomic forecasting. The aim of the article is to present the results of the fourth edition of the project Macroeconomic challenges and forecasts for Poland. The survey was conducted in the period November 8, 2019 – December 6, 2019. The article presents the prognostic consensus of experts cooperating with the European Financial Congress. In addition to classic macroeconomic forecasts for Poland, it contains threats to sustainable economic development and financial system stability, together with estimates of the subjective probability of implementation. Using the knowledge and competences of experts cooperating with EKF, recommended actions for economic policy were formulated, aimed at weakening the impact of identified threats in the future.

The purpose of this work is to characterise the cooperative bank sector’s strengths, weaknesses, chances and threats identified by its representatives in Poland, as well as to determine desirable changes in the organisation and functioning of cooperative banks. In analytical terms, the assessments and conclusions were based on presentations and panel discussions of participants of the Forum of Cooperative Bank Leaders, which was held in Warsaw on 17–18 September 2019. It was concluded on the basis of the analysis that although cooperative banks are aware of their weaknesses and strengths as well as they see chances and threats for their operations, they clearly lack consensus on the shape and joint actions in the scope of the development of a new business model. The greatest expectations of these banks are connected with the development of electronic economy and digitisation, which requires considerable financial outlays and organisational effort. The key problem is the insufficient level of integration and cooperation within associations functioning and among them, as well as lack of willingness – even reluctance – of many banks to change the existing model. Greater integration of all entities in the cooperative bank sector is the necessary condition for the improvement of banks’ operations and their further development.