Denmark: Financial System Stability Assessment with reports on - IMF

More documents

Recommendations

Info

48SubjectMain Findings and Recommended Corrective Action Plan- Lower the risks in the system by either implementing aloss-sharing and liquidity arrangement or lowering thepositions in the netting by setting lower maximumlimits for individual transactions and dividing thepayment flows effectively in batches during thesettlement day instead of concentrating them in the firstnormal settlement cycle at 1:30 a.m.Assets for settlement (CP VI)- Take measures to prevent the booking of the retailpayments in the account of customers before thesettlement is final, as long as the settlement is notguaranteed by adequate risk management measures.Alternatively, the results of the ordinary clearing couldbe settled immediately after the processing is finished,whereupon the data on the underlying retail paymentscould be distributed (see above).SumclearingThe overseers of the system should:- Gather information on possible concentration risk, theamounts settled and the deposit risk for the smallerbanks that use a specific settlement bank, and analyzethe consequences for smaller banks and the trust in thesystem in case of a default of one of the largersettlement banks.Security and operational reliability; andcontingency arrangements (CP VII)KRONOS- Coordinate the contingency plans of DanmarksNationalbank, BEC, VP, PBS, and develop aninfrastructure for broad testing of emergencyprocedures.- Re-negotiate <strong>with</strong> BEC the maximum restart time andagree to comply <strong>with</strong> the international best practice oftwo hours.- Develop the securities analysis methodology developedby the ECB further and adapt it according to newinsights <strong>with</strong> respect to IT security.- Ensure that communication via the proprietary networkobserves international standards <strong>with</strong> respect tointegrity.- Stress test all parts of the system adequately and ensuresufficient peak capacity.- Analyze the complexity of the system design and itsinteraction <strong>with</strong> other systems of DanmarksNationalbank or of BEC and study how this complexity
49SubjectMain Findings and Recommended Corrective Action Plancould be reduced.Sumclearing- The contingency measures should be tested <strong>with</strong>participants and the emergency measures should becoordinated <strong>with</strong> other system providers.Practical for the markets and efficient for theeconomy (CP VIII)KRONOS- Re-analyze in depth the costs of the system.- Define the part of the cost to be borne by the centralbank.- Develop a price strategy that takes into account the feescharged in comparable countries.Objective and publicly disclosed criteria forparticipation (CP IX)KRONOS- Reconsider the discretionary powers <strong>with</strong> respect toaccess and exit.- Analyze the effects of the language barriers for remotemembers and whether they are in line <strong>with</strong> the veryopen access policy and the promotion of <strong>Denmark</strong>’sfinancial markets.- Formulate explicit exit procedures in the rules andregulations.SumclearingThe Danish Bankers Association should:- Facilitate the public disclosure of the access criteria bystating the rules in the memorandum mentioned underCP II.Governance of the system should be effective,transparent and accountable (CP X)- Make the exit rules more formal by drafting exitcriteria and work out decision procedures andprocedures to facilitate the exit of a participant andpublish them in the aforementioned memorandum.SumclearingThe Danish Bankers Association- May want to consider enhancing the transparency ofthe infrastructure for clearing and settlement of retailpayments by making the memorandum, as indicatedunder CP II, available to the public by publishing it onits open website.Responsibility B - The central bank should- Should take action to comply in full <strong>with</strong> all CorePrinciples.- Draft a mission statement and work out the oversight
Page 1: © 2006 International Monetary Fund
Page 4: 2ContentsPageGlossary .............
Page 7 and 8: 5ML/FTMLAMoEBMoUNAONPOOTCPEPROSCRSS
Page 9 and 10: 76. The payment and securities clea
Page 11 and 12: 9Figure 1. Nordic Countries: Reside
Page 13 and 14: 11Table 1. Denmark
Page 17 and 18: 1518. Stress test results need to b
Page 21 and 22: 19Table 5. Financial</stron
Page 23 and 24: 21Table 6. Market Shares of Major <
Page 25 and 26: 23is hence higher than the EU minim
Page 27 and 28: 25Table 7. Nordic Capital Markets,
Page 29 and 30: 27coverage of such rules to key per
Page 31 and 32: 29 ANNEX IOBSERVANCE OF FINANCIAL S
Page 33 and 34: 31Mortgage financing5. Danish mortg
Page 35 and 36: 3314. Licensing and Structure (CPs
Page 37 and 38: 35Authorities’ responseWith a few
Page 39 and 40: 376. The life sector is dominated b
Page 41 and 42: 39may be subject to more frequent f
Page 43 and 44: 41Reference PrincipleRisk assessmen
Page 45 and 46: 43 ANNEX IVREPORT ON THE OBSERVANCE
Page 47 and 48: 459. The infrastructure for retail
Page 49: 47Main findings19. The assessment d
Page 53 and 54: 51Regarding the recommendation to f
Page 55 and 56: 53 ANNEX VREPORT ON THE OBSERVANCE
Page 57 and 58: 5510. All securities traded in the
Page 59 and 60: 57and a zero-hour rule does not exi
Page 61 and 62: 59Table 2. Recommended Actions to I
Page 63 and 64: 61 ANNEX VIIntroductionREPORT ON TH
Page 65 and 66: 63negligible. Authorities recognize
Page 67 and 68: 6521. STR reporting by Danish finan
Page 69 and 70: 67FATF 40+9RecommendationsKEY RECOM
Page 71 and 72: 69Declaration or for non-compliance
Page 73: 71 APPENDIXStress Tests—Market Ri

Denmark: Financial System Stability Assessment with reports on - IMF

Create successful ePaper yourself

Delete template?

Save as template?