(ii)  Banking supervision  This potential conflict between monetary policy and maintaining the stability of the banking system is not one which has greatly troubled most western industrial countries in recent years. But in some transition economies, such conflicts have been real. In most, the problem has not been so much to maintain the stability of the banking system as to create a robust banking system from a number of often insolvent state-owned banks spun off from the old monobank, together with newly created commercial banks whose behaviour has frequently been far from prudent. BIS Review 33/1997  -7-  In contrast to the diverse arrangements in the west, banking supervision in transition economies is nearly always the responsibility of the central bank (although in some cases the Ministry of Finance is also involved in the licensing of banks). An exception is Hungary, where supervisory responsibilities have in large measure been transferred to the State Banking Supervision Office: the central bank is nominally responsible only for monitoring banks’ liquidity and foreign exchange positions, although in practice its role extends rather more widely. In most of the countries - especially in those with hopes of acceding soon to the EU - banking legislation approximating to western standards is (or is about to be) in place. But in practice, banking supervision has proved a difficult topic to master.
We have given advice principally on core functions such as monetary policy and operations, the development of money markets and payment systems, the management of government debt, and banking supervision; but our help has also been sought in some less obvious matters such as the physical security of central bank buildings and their contents. The assistance is provided through our experts visiting other central banks and by their staff coming on study visits to London, as well as through seminars and workshops here and abroad. In the earlier years most of these events were essentially training courses. But increasingly the participants from many countries are able to contribute more themselves to the discussion so that they are now learning not only from our own experience as central bankers, BIS Review 33/1997  -2-  but also from each other. And in some instances, their experience may well hold lessons for us. Since 1990 over 4,000 staff of other central banks - two thirds of them from the transition economies - have participated in these various events. The work of the Centre for Central Banking Studies, and the other inter-bank links we maintain (notably between supervisors) give us, I believe, a privileged perspective on the development of central banking across Europe. The analysis below - particularly the Eastern European sections - is very largely the work of Lionel Price, the Centre’s Director, and his staff.