The Fault Lines in Cross-Border Banking: Lessons from the Icelandic Case
This paper discusses the fault lines in cross-border banking, both at the global level and at the European Union/European Economic Area (EU/EEA) level, using the case of the three Icelandic cross-border banks as an example. Cross-currency liquidity risk built up prior to the crisis, especially matur...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch Buchkapitel |
| Sprache: | English |
| Veröffentlicht: |
Paris
OECD Publishing
2012
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| Schlagworte: | |
| Online-Zugang: | DE-384 DE-473 DE-824 DE-29 DE-739 DE-355 DE-20 DE-1028 DE-1049 DE-521 DE-861 DE-898 DE-92 DE-91 DE-573 DE-19 URL des Erstveröffentlichers |
| Zusammenfassung: | This paper discusses the fault lines in cross-border banking, both at the global level and at the European Union/European Economic Area (EU/EEA) level, using the case of the three Icelandic cross-border banks as an example. Cross-currency liquidity risk built up prior to the crisis, especially maturity mismatches in foreign currency. This risk tended to be grossly underestimated at the time. There was a run on banks' FX liabilities after the collapse of Lehman Brothers in September 2008. The Icelandic banks were highly vulnerable to such a run and lacked a credible lender of last resort (LOLR) in terms of foreign currency. The crisis also exposed serious flaws in the EU and EEA framework for cross-border banking, including deposit insurance. One of the main lessons of the Icelandic experience is that sizeable cross-border banking operations in small countries with their own currency come with very significant risks. The Icelandic experience suggests that further reforms are needed for cross-border banking activities in the Single Market, where the key issue is to match the European passport for banks with pan- European supervision, deposit insurance and LOLR. Domestic banks could remain in the domestic system |
| Beschreibung: | 1 Online-Ressource (11 Seiten) 21 x 28cm |
| DOI: | 10.1787/fmt-2011-5k9cswn0lljj |
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Datensatz im Suchindex
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| spelling | Guðmundsson, Már Verfasser aut The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case Már Guðmundsson Paris OECD Publishing 2012 1 Online-Ressource (11 Seiten) 21 x 28cm txt rdacontent c rdamedia cr rdacarrier This paper discusses the fault lines in cross-border banking, both at the global level and at the European Union/European Economic Area (EU/EEA) level, using the case of the three Icelandic cross-border banks as an example. Cross-currency liquidity risk built up prior to the crisis, especially maturity mismatches in foreign currency. This risk tended to be grossly underestimated at the time. There was a run on banks' FX liabilities after the collapse of Lehman Brothers in September 2008. The Icelandic banks were highly vulnerable to such a run and lacked a credible lender of last resort (LOLR) in terms of foreign currency. The crisis also exposed serious flaws in the EU and EEA framework for cross-border banking, including deposit insurance. One of the main lessons of the Icelandic experience is that sizeable cross-border banking operations in small countries with their own currency come with very significant risks. The Icelandic experience suggests that further reforms are needed for cross-border banking activities in the Single Market, where the key issue is to match the European passport for banks with pan- European supervision, deposit insurance and LOLR. Domestic banks could remain in the domestic system Finance and Investment Iceland https://doi.org/10.1787/fmt-2011-5k9cswn0lljj Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Guðmundsson, Már The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case Finance and Investment Iceland |
| title | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case |
| title_auth | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case |
| title_exact_search | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case |
| title_exact_search_txtP | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case |
| title_full | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case Már Guðmundsson |
| title_fullStr | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case Már Guðmundsson |
| title_full_unstemmed | The Fault Lines in Cross-Border Banking Lessons from the Icelandic Case Már Guðmundsson |
| title_short | The Fault Lines in Cross-Border Banking |
| title_sort | the fault lines in cross border banking lessons from the icelandic case |
| title_sub | Lessons from the Icelandic Case |
| topic | Finance and Investment Iceland |
| topic_facet | Finance and Investment Iceland |
| url | https://doi.org/10.1787/fmt-2011-5k9cswn0lljj |
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