Cross-border supervisory cooperation : a progress report and research agenda

Abstract

National supervisors in a world of integrated financial markets and cross-border banks face limited information and biased incentives, which can exacerbate financial fragility. While supervisory authorities have started cooperating across borders, such cooperation falls mostly short of supranational supervision as in the euro area. This paper summarises recent theoretical and empirical research in this area; it presents data on cross-border supervisory cooperation, shows the (limited) stability impact of such cooperation and reactions of global banking groups to increased supervisory cooperation.