Ivan Iskrov: Strengthening the regulatory and supervisory capacity of the
financial regulators
Opening remarks by Mr Ivan Iskrov, Governor of the Bulgarian National Bank, at the official
opening ceremony of the Twinning Project "Strengthening the Regulatory and Supervisory
Capacity of the Financial Regulators", Podgorica, Montenegro, 15 December 2009.
* * *
Dear Twinning Partners,
Your Excellencies,
Ladies and Gentlemen,
We have gathered here to start the Twinning Project "Strengthening the Regulatory and
Supervisory Capacity of the Financial Regulators" funded by the European Union. It is my
pleasure and privilege as the Governor of the Bulgarian National Bank, which is the lead
institution managing this project, to express on behalf of the management of the BNB our
strong commitment to work with the twinning partners during the next 18 months to achieve
the targeted results. In times of trouble when all financial supervisors are under severe
pressure and when many projects in the financial sector tendered by the European
Commission failed to find interest among EU member states, we are committing our
resources, our best experts, expertise and knowledge to this project. The Republic of
Bulgaria supports the European prospects for the Western Balkans, and Montenegro in
particular. We strongly believe that our joint work will contribute to the country's progress on
the path of European integration.
It is by all means a very ambitious project that includes more than 55 activities and
benchmarks, more than 10 directives to be transposed, several legal acts to be prepared,
and many internal procedures to be created for a better supervision that complies with the
international best practices.
This project comes at a very specific moment for the global financial sector. It aims to create
conditions for long term economic stability and growth by strengthening the regulatory and
supervisory frameworks of the capital and financial markets and by improving the institutional
and regulatory capacities of the financial sector regulators to supervise financial markets and
institutions in line with the EU acquis. Therefore, the objectives of the Twinning Project are
fully in line with the main lesson from the crisis - that stability and growth cannot be
maintained without a stable and well functioning financial sector.
First, let me present our consortium and the project team. The consortium unites the
experience of a Еurosystem central bank (De Netherlandsche Bank) - with a proven track
record of successful technical assistance projects for accession country institutions -
together with the expertise of the Bulgarian National Bank and the Financial Supervision
Commission, both having the most recent and relevant experience in EU harmonization in a
new Member State. This combination of experience is further strengthened by the
longstanding and successful cooperation between the consortium members. The advantage of
having a consortium is that it offers larger experience and a broader pull of experts from the
twinning partner institutions. The three consortium members have completed many
successful twinning projects in the financial sector and have gained a sound project
management capacity.
We have strongly committed ourselves to this project for various reasons. We are
encouraged by the progress achieved by the financial supervision authorities in Montenegro
in bringing financial sector regulation closer to the EU requirements. Also, there are many
signs of already built cooperation with the Montenegrin authorities that need further
strengthening. Bulgaria, the Netherlands and Montenegro are in the same IMF constituency
which has created good mutual knowledge of their economies and fostered long-term
cooperation on financial issues.
We consider our experience relevant to Montenegro not only because of the scale of the
economy, but also because of the similarities of the supervisory structures. In the accession
process we have learnt several major lessons. Bulgaria did not ask for any transitional
acquis
periods or derogations concerning the banking sector communautaire. Furthermore,
all EU directives in this sector were transposed in time and most of them long before the
deadlines. This approach has turned to be a success since the early adoption of the EU rules
in financial supervision contributed to the smooth functioning of the financial market and
fostered the stability of the financial system. One of the main keys to the smooth transition in
the accession process is the cooperation between the institutions involved in financial
regulation and supervision. The respect for the independence of financial supervision
authorities and the cooperation between them is an important indicator for the preparedness
for EU accession. I would like to emphasise in particular the requirement for institutional
financial and personal independence of the central bank as stipulated in article 130 of the
Lisbon Treaty.
Let me now turn to the challenges ahead of our project.
First of all, the EU response to the crisis envisages fundamental changes in both the legal
and institutional frameworks of financial regulation. Most of the EU directives and regulations
are currently being changed. (Mr. Simeonov will talk about these later) This is a challenge for
our project, and I would like to suggest that we take into consideration the latest EU acquis
communautaire in our joint work. That is why we included in our team the experts who are
members of the EU committees and working groups in the area of financial supervision,
including the Committee of European Banking Supervisors, Economic and Financial
Committee, Financial Services Committee, Committee of European Securities Regulators,
where all these novelties are constructed. This will help the project to benefit from the most
recent developments in the EU financial supervision policies and legal framework.
The other challenge is related with the ongoing crisis which calls for an immediate response
from the national authorities and is of utmost importance. Therefore, I believe we have to
focus our activities as much as possible on helping the Montenegrin authorities in addressing
the challenges of the crisis.
Last but not least, our Project will be implemented by 7 authorities - three of them from EU
member states and four from the beneficiary country. The strong commitment and
cooperation between the partners is a prerequisite for our success. I would like to thank our
twinning partners for the cooperation we have already established, owing to which this
project came to its successful start and will further develop to its ultimate success. I would
also like to thank in particular the Central Bank of Montenegro, for providing the facilities and
hosting our resident twinning advisor for the next 18 months.
I wish success to all of you and to our joint project.