There are four important forms of oversight that should be included in the organisational structure of any bank in order to ensure appropriate checks and balances: (i) oversight by the board of directors or supervisory board; (ii) oversight by individuals not involved in the day-to-day running of the various business areas; (iii) direct line supervision of different business areas; and (iv) independent risk management, compliance and audit functions.
The existence of pronounced current account imbalances does not necessarily imply a threat to the stability of the international economic and financial system. Deep, liquid and interconnected markets like today’s can easily permit these imbalances to be financed. The crucial problem is to understand whether the current trends are sustainable and whether the adjustment will take place in an orderly fashion.