Supervisory lessons: the need for intrusive supervision

Magnifying glass

Since macro factors trigger systemic crises, macro-prudential supervision is a must. Macro-prudential supervision should be institutionalised and closely co-ordinated with micro supervision. Both should operate under a strong, common authority, particularly bearing in mind that ‘intellectuals’ (macro) and ‘policemen’ (micro) make uneasy bedfellows.

Tough supervision can help plug any regulatory gaps, but weak oversight can undermine even the soundest of regulations. The real-world evidence is

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