Network-centric organization of supervisory and regulatory processes in the banking system of the European Union

Abstract

Summary:

The need for the transformation of the financial institutions during the current crisis requires that new approaches for ensuring stability and efficiency of the financial system are sought and implemented. The purpose of this article is to describe the need for enhanced transformation of supervision and regulation of the EU banking system, as well as show the possibility of achieving a decisive efficiency and stability through the introduction of concepts related to the network approach and the treatment the system as a critical infrastructure. Drawing on means related to the construction of high operational safety systems, the paper outlines ways to transform the financial (banking) system, from a structure with subsequent (delayed) regulation and management into an operational self-regulating system (system of systems) operating in near real-time. This transformation would presumably allow for a sharp increase in the system’s stability and operability. The prerequisites for achieving networkcentric supervision and regulation in transforming the EU banking system are discussed.