A good bank requires good supervision

To be a ‘good bank’, a bank must be efficient, innovative and trustworthy. Given its central role at the heart of the economy and financial system and the risks associated with fulfilling its role, banks have to operate within an environment subject to laws, regulations and directives.

Outcomes can often be subject to the constraints of such supervision, but not entirely. In fact, apart from the regulation that sets out the rules of the game, supervision should naturally complement activities, offering degrees of regulatory freedom within the constraints of stated standards in order to help banks achieve the best outcome possible from a business and economic perspective.
Supervision includes all actions performed in order to monitor the operation of banks and the banking system. It reports on normal or abnormal operations, and ensures compliance within the constraints imposed by stated standards. So if supervision is a factor in strengthening the confidence of economic agents towards banks, can we say that all types of supervision provide such confidence?

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