Recommendations of the IMF and world bank for banking supervisory institutions in responding to crisis situations

Abstract

The joint recommendations of the IMF and World Bank, as well as specific recommendations of these international financial organizations to banking supervisory institutions worldwide in responding to crisis situations, have been analyzed. The research subject is the functioning of banking supervisory institutions in crisis conditions, particularly during the COVID-19 pandemic, and their consideration of IMF recommendations, including: the utilization of flexibility in legislative and supervisory principles; support for minimal prudential standards and adherence to international standards; facilitation of carefully crafted state and private support measures targeting affected borrowers and sectors; minimization of moral hazard and preservation of sound credit risk management practices; facilitation of effective distribution of new loans; guidance on asset classification and creation of reserves to cover potential losses; alignment with banking standardization recommendations; avoidance of regulatory softening in defining open positions on non-performing loans; support for transparency and provision of additional guidance on risk disclosure; suspension of automatic corrective supervisory actions in extraordinary circumstances; review of supervisory priorities and support for dialogue with the banking sector; active coordination with colleagues in national and international supervision; and ensuring the uninterrupted functioning of critical market infrastructure. The measures taken by banking supervisory institutions in response to the COVID-19 pandemic, in accordance with IMF and World Bank recommendations, are described. Experts from the World Bank provide insights into regulatory/supervisory policy priorities. The interaction between Ukraine and the IMF regarding the response of banking supervisory institutions to the coronavirus pandemic is discussed.