Alan Bollard: Being a responsible host - supervising foreign-owned banks (Central Bank Articles and Speeches)

For any country, the stability of the financial system is critical to a healthy economy a point that becomes dramatically apparent when systemically important banks fail. This is equally true for a financial system dominated by foreign-owned banks as for one composed mainly of domesticallyowned banks. In either case, the supervisory authority and central bank whether home or host must ensure that they have the capacity to maintain a robust financial system and to respond quickly and effectively to any financial crisis often within hours. This is a challenge for any supervisor, but it is all the more complicated when it is a foreign-owned bank that gets into difficulty, given different jurisdictions, potentially different statutory objectives between home and host authorities, and a greater degree of jurisdictional separation between taxpayers and depositors than is the case with domestically-owned banks.