De Nederlandsche Bank, Amsterdam 25-27 April 2007 Seminar on Financial Stability Matthijs van Oers, DNB Payments System Division Jakob Rotte, DNB Financial Stability Division Workshop on Crisis management • macro-economic / monetary • financial institution – financial / operational • payment / settlement systems Typology: What is a crisis? • no blueprints • great and potentially conflicting interests, moral hazard • great number of authorities involved, particularly in cross-border crisis • time pressure • time scene changes • barriers to crisis resolution (legal, financial, political) What makes crisis management (regarding financial institutions) difficult? • relationship supervisor, central bank, ministry • relationship with financial institution(s) and financial sector Crisis management at national level • various financial stability issues: too big to fail, too big to save, systemic impact, systemic relevance, home/host issues • division of responsibilities in EU-supervision: home country control, branches, subsidiaries • division of responsibilities not clear for crisis management • multilateral MoUs EU (2003 and 2005) + bilateral MoUs (but: ignoring non-EU) Cross-border crisis • • • • in supervision central bank – liquidity support finance ministry deposit insurance Crisis management – various instruments • conditions (counterparties, solvent, collateral, haircut, interest rates) • constructive ambiguity • ESCB procedure Crisis management – emergency liquidity assistance