At the recent Knowledge Sharing Session, 119 participants from different agencies joined to discuss and gain valuable insights on achieving positive inter-agency cooperation and effective management of banking crises at domestic and cross-border levels. Perbadanan Insurans Deposit Malaysia (PIDM) hosted the session on 12 January with other financial safety net members, the Ministry of Finance Malaysia and Bank Negara Malaysia. Themed ‘Inter-Agency Collaboration in The Management of Banking Crises’
, the session introduced international experts with experience in resolution cases and banking crises, and expertise in policy design to educate and guide participants in the area of inter-agency and cross-border cooperation.
The event started with a keynote address by Oliver Wünsch; Partner, Sovereign Finance at Oliver Wyman, on the preparation and management of banking crises. He reiterated the importance of developing effective plans prior to a bank failure and how doing so could lessen the impact on the overall financial stability, making way for a much more deterministic liquidation and resolution process.
That message carried on into the first panel discussion titled ‘International Cooperation and Coordination in Banking Crises’
. Moderated by Oliver Wünsch, he was joined by panel speakers:
- Glenn Tasky, Director of Financial Stability, Financial Supervision, and Payments, The SEACEN Centre;
- Ruth Walters, Senior Adviser, Financial Stability Institute; and
- Stefan Gannon, Special Adviser to the Chief Executive, Hong Kong Monetary Authority.
The panel deliberated on the rarity of official bank failures and how this can contribute to the underdevelopment of bank resolution regimes, the obstacles in achieving effective cross-border resolution and how to overcome them, and the importance of strong cooperation and coordination between agencies in handling banking crises. The panel agreed that having playbooks or a crisis binder to refer to, conducting crisis simulations, and continuously revising existing plans and policies helps ensure ideal operational preparedness.
In the second panel discussion titled ‘Domestic Inter-agency Collaboration in Banking Crises’,
the speakers talked about the challenges agencies face when it comes to collaborating during a banking crisis. Wei Ying Cheah, Partner, Finance and Risk, Oliver Wyman, moderated the dialogue with panel speakers:
- Paul Fisher, Former Member of the Monetary Policy Committee and Executive Director for Markets, Bank of England;
- Atilla Arda, Senior Financial Sector Expert, Monetary and Capital Markets Department, International Monetary Fund; and
- Luis Cortavarria, Former Senior Adviser, Monetary and Capital Markets Department, International Monetary Fund.
The discussion touched on liquidity crises and operational issues, inter-agency concerns that may arise when handling banking crises, and the importance of crisis simulations. The speakers highlighted the best way to address inter-agency coordination and improve the operationalisation of resolution tools is through an actual bank failure or a crisis. Since bank failure or crisis does not happen frequently, crisis simulation exercise is a good testing instrument. Inter-agency cooperation and coordination are needed in every stage of crisis management and bank failure resolution while maintaining respect for the autonomy of each agency. Ultimately, the panel agreed that all the parties involved should work together to harmonise bank resolution tools and promote international best practices in crisis preparedness, coordination, and cooperation.
The Knowledge Sharing Session is a part of PIDM’s initiative toward realising readiness for resolution and crisis management, which is one of the three key strategic pillars for PIDM as outlined in its Corporate Plan 2023 - 2025.
1. Oliver Wünsch, Partner, Sovereign Finance at Oliver Wyman (moderator and speaker)
2. Stefan Gannon, Special Adviser to the Chief Executive, Hong Kong Monetary Authority
3. Ruth Walters, Senior Adviser, Financial Stability Institute
4. Glenn Tasky, Director of Financial Stability, Financial Supervision, and Payments, The SEACEN Centre
5. Wei Ying Cheah, Partner, Finance and Risk, Oliver Wyman (moderator)
6. Paul Fisher, Former Member of the Monetary Policy Committee and Executive Director for Markets, Bank of England (attending virtually)
7. Atilla Arda, Senior Financial Sector Expert, Monetary and Capital Markets Department, International Monetary Fund
8. Luis Cortavarria, Former Senior Adviser, Monetary and Capital Markets Department, International Monetary Fund