I would like to say that the matters always crucially depended on the competence, potential and the positive political will of those who represent and manifest the people’s sovereignty. It will be so in future, as well. 3) In the globalized world, when it became apparent that the systemic crises exceed the borders of one national jurisdiction easily, the issue of the global financial architecture and the issue of coordination, gain extremely high significance. The new regulatory architecture I spoke about at the beginning, the examples for cooperation of the concerned governments and central banks during this crisis are truly encouraging. However, this path is full of scyllas and haribdas. Many obstacles need to be overcome. The paradigm “think globally, act locally” was and it still is very much manipulated by the local leaders who need the votes of the local voters to be as they like it. This mentality guarantees no financial stability. This path needs a lot of work. VI. Where is the Republic of Macedonia with respect to these trends? Our general policy is to adhere to the suggestions and the recommendations of the Basle Committee. Regarding the modification in the defining of the core capital, the current methodology on determining the banks’ capital adequacy already contains the approach proposed by the Basle Committee as regards to the deductable items.
(Carosio) Although it is possible, he says, to reach an agreement on some of these proposals, in particular on resolution mechanisms, others (e.g. breaking up institutions according to some criterion) would require a broad international political consensus, which seems unlikely at this stage. The second approach would be directed toward seeking additional capital requirement, or a tax, according to the measure for systemic relevance. Taxation seems, according to Carosio, more adequate in a burden-sharing perspective. “The solution, in my judgment”, says Greenspan “that has at least a reasonable chance of reversing the extraordinarily large ‘moral hazard’ that has arisen over the past year is to require banks and possibly all financial intermediaries to hold contingent capital bonds, that is, debt which is automatically converted to equity when equity capital falls below a certain threshold”. “However, should contingent capital bonds prove insufficient, we should allow large institutions to fail, and if assessed by regulators as too interconnected to liquidate quickly, be taken into a special bankruptcy facility”. So, he supports the second approach, and in that light is the latest legislation in the USA which is about to be adopted, as well as the proposals in Europe which envisage measures of this kind. Namely, “Restoring American Financial Stability Act”, which was passed in the US Senate on May 20, would impose significant new obligations and restrictions for the SIFIs, envisaging a possibility for the FED to introduce rising strict rules for capital, leverage and liquidity.