Macroprudential Department..

Halo Halo...
I just want to update my new experience. I had just recently been transferred to another department called: Macroprudential Department. Its a whole new experience, although my job desc is the same: developing domestic financial market. But since i am now in macroprudential department, i need to look the connections between the effort to deepen the financial market, and its impact to financial system stability. That's a whole new ball game. Its a different thought process.

Paul Fisher, Member of MPC BOE, mentioned that Financial markets are fundamentally about risk-taking: credit risk, liquidity risk and market risk are basic components of even the safest and soundest banking systems. As a society, we need risk taking as part of the process of allocating capital to competing ends. And people who take risks – at least with their own money or their own careers – need to be rewarded (appropriately!) for that risk or they won’t take it. So we are not in a world where, as a matter of policy, we want to eliminate financial risk. The key is for financial risks to be properly appraised, priced, managed and provisioned. And we should discourage some of the cross-subsidisation of different types of risk taking if we want risk capital to be appropriately allocated. That includes any perceived public subsidy, which is what the ICB recommendations are about. We also want to avoid profits being made out of dishonest practices such as insufficient provision of information, the deliberate mis-pricing of risk or other market abuses. The new
Financial Conduct Authority will have an important role to play in that.

Wow.. what a different ball game. FInancial market cannot longer be developed without supervision, despite the fact that the financial world still need risks component. Need to learn some more... have a great week ahead...