Financial Regulation and Supervision - Microprudential supervision

4 important questions on Financial Regulation and Supervision - Microprudential supervision

Discribe a regulatary system in the EU?

A home-country control combined with minimum standards and mutual recognition (= erkenning)

How are the authorities of a financial institute arranged?

It's authorised and supervised in it's home country and can offer cross-border services without additional supervision by host-country authorities.

Where are the minimum requirements of prudential supervisioen laid down?

In the respective EU Directives (minimum standards) also via subsidiaries (in separate legal entities) fromother countries
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What does pro-cyclicality in bank lending?

The probability of default and the related recovery rate are not constant in time. Also losses in loan book lower on a bank's profitability  = deduction from capital no new loans...

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