Financial Stability and Bank Supervision in the Twenty-First Century

Abstract

This chapter addresses the challenges and opportunities for financial stability and bank supervision in the twenty-first century. It is argued that one of the major challenges to the vision of achieving a world where the financial systems are stable, reliable, and accessible was the 2008 global financial crisis. The G20 took up an agenda to improve regulation and supervision regimes globally through initiatives such as higher capital requirements and new liquidity regulations. However, challenges have emerged due to advances in technology, financial innovations, climate change, legislative or regulatory barriers and money laundering, organized crime, corruption, and the financing of terrorism. In particular, supervisors in developing economies face the challenge of how to ensure financial stability while at the same time promoting the development of the financial system to sustainable economic growth for poverty reduction and greater equality.