Stress testing and consolidated supervision as instruments for enhanced risk-oriented monitoring of banks’ activities

Abstract

Today one of the key tasks of economic development in different countries of the world is the ensuring of stable functioning of the financial sector in general and the banking system in particular. The processes of consolidation of bank capital, complication of banking business technologies, increasing banks’ risk appetite for risk concentration and speculative operations, and increasing systemic financial risks require the attention of financial sector regulators to identify potential imbalances in the activities of banks. One of the central places in the banking regulation system is off-site banking supervision, in particular, remote monitoring of the activities of banks. A series of reforms aimed at introducing macro-prudential banking supervision in accordance with the requirements of the Basel Committee on Banking Supervision has been initiated, but given the low transparency of domestic banks and the lack of existing mechanisms for risk taking into account in supervisory work, the reform of the existing system of remote monitoring on the basis of risk-oriented approach.