The development of international

The development of international
Control of competition between countries are also experiencing growth due to liberalization of free trade globally. However, a more significant is menguatnya the economy and politics of the EU. Liberalization among the countries strengthen relationships between financial institutions, markets and countries.

Impact on the bank supervisory and regulatory
Developments in the financial market liberalization and the inter-state bank supervisors, especially considering that the central bank's financial regulations have been much weakened.

Before the period of liberalization in the year 1970 and the 1980s focused on the financial regulations:
Authorization of financial institutions
Provide a strict restriction on the activities permitted for financial institutions in different
Definition of ratio-the ratio of balance sheet and bank obligations such as mandatory minimum level of cash manjaga on the central bank (GWM) to maintain minimum assets or securities in the domestic.

Development of new regulations
Measure of market performance with respect to their income from the risk they take. If the supervisor can create rules in line with the market so they can make the rules more effective and more relevant to the institutions that set.
The increasing globalization to improve the capital market needs to ensure that norms circumspection accepted internationally and are implemented consistently
Regulations only a part of the solution. Risk of the international financial intermediasi depends on several things such as ensuring minimum standards in the bankruptcy law, accounting and auditing standards and the obligation of transparency (disclosure).

Stability And Competition

Financial Stability (Financial Stability)
With financial stability is a situation where the finance company and the market can efficiently mobilize savings, provide liquidity and allocate investment without interference. Potentially subject to financial stability occurs when the periodic failure of financial institutions. Failure is only a periodic attention when terganggunya cause the banking system.

Monetary Stability
Monetary stability is the stability of currency values (ie low and stable inflation). Monetary stability, financial stability, with different. Although the same can happen, they do not always become a 'fellow travelers'.

Financial Liberalization
The main reasons why monetary policy that does not always result in successful financial stability is the 'wave' liberalization of the financial market in the year 1970 and the 1980s. Role in managing the country's economy was reduced through the following actions:
With rules gone that inhibit competition among financial institutions, including the liberalization bank operational requirements permit, which is the major part of the regulation until the 1970s
With absence limit-limit financial transactions such as the maximum interest rate of loans and deposits
With absence international capital movement restrictions at the same time with the introduction of currency exchange

Competition and banking
Liberalization of financial market pressure to increase competition among banks with:
Forcing banks to reduce the margin business - a bank must be the product more competitive (in price)
Creating a large number of newcomers, so that increased competition

Difficulty in obtaining the same in this situation means that many institutions are forced to increase the risk of the acquisition be to maintain revenue.

Innovation of financial products
Liberalization of the financial sector also cause a period in which innovations occur rapidly, especially the growth of products such as futures, options and Swaps (derivatives market) and sekuritisasi assets. These products increase the ability of banks to move the risk among banks and investors and to the other.

Capital And Liquidity

When a bank provides loans and borrowers can not pay, Insolvency of the bank not only capital spending but also DPK shareholder bank, the natural business of banks is' highly geared 'or' highly leveraged '.

Gearing
Gearing is the ratio of debt to the company's capital. Almost all banks (except special bank) has a high leverage for using DPK for the credit.

Capital
Capital is the number of shareholders in the investment bank as stated in the balance sheet. Capital a bank is the financial resources available for capital because of losses mengabsorb not need to be paid.

Insolvency
Insolvency is the inability of companies to pay all obligations due. Bank which is in the position of suffering is called solvency crisis.
Bank solvency crisis in the economy can affect the minor / local. However, when the page crisis affecting the banking sector, the economy may be affected.
There is a rumor about the problem can cause the depositor attract funds (rush). Because the bank can not ask the debtor to immediately settle the loan, the bank can experience the same fate as a result of bad debts and the bank will suffer a crisis of liquidity.
Without a mechanism for the management of liquidity, illiquidity / liquidity crisis can cause Insolvency. When widespread liquidity crisis, the impact on the economy will be the same as the impact of the crisis on the banking industry solvency.


Central banks as' lenders of last resort '
Role of central banks as a guardian (and as a supervisor) from the banking system began in the 18-th century.
In the interest of the community, because the status spesialnya, banks sometimes require assistance from the central bank. Central bank to provide support through their role as' lenders of last resort 'to maintain the stability of the financial system.
As' lenders of last resort 'central bank provides funds to commercial banks to ensure that the solvency or liquidity crisis will not become the economic crisis.