International Lending in a Fragile World Economy: A Supervisory Perspective

Abstract

It has often seemed to me that the relationship of the supervisory authorities to the international banking community has much in common with that of doctors and their patients. Like the single doctor the supervisor at the na­tional level cannot handle every patient or every disease; he may not always know the regulatory diet which his colleague elsewhere has prescribed and he may be a bit out of touch with the latest approach to medication both preventative and curative. Also, like the doctor, the banking supervisor has taken his Hippocratic oath of secrecy and, again like the doctor, he often grumbles that his warnings, usually related to over-indulgence or a lack of care, tend to be ignored until it is too late. In the spirit of this analogy I would like today to take the pulse of the international banking system, to attempt some diagnosis of the problems it faces and possible approaches to treatment.