According to the literature, for supervision to be considered effective it should be able to effectively develop, implement, monitor and enforce supervisory policies under normal and stressed economic conditions. BIS (2012) defines several preconditions for effective supervision in practice: 1) sound and sustainable macroeconomic policies as a core precondition for stable financial system; 2) a well established framework for financial stability policy formulation i.e. clear framework for macro prudential surveillance and financial stability policy formulation; 3) proper regulatory environment; 4) a clear framework for crisis management, recovery and resolution; 5) an appropriate level of systemic protection (or public safety net) such is a system of deposit insurance which contributes to public confidence in the system and thus limit contagion from banks in distress and 6) effective market discipline. Transparency is another factor that gains growing importance in recent years. Thus, in order to restore confidence and rebuild financial stability there was a strong push towards supervisors to increase their transparency to the markets and the public. One supporting argument for these trends is the role of transparency as prerequisite for accountability. Higher transparency enhances the legitimacy of the supervisor, also safeguarding his independence. When transparent, the supervisory actions become more predictable thus helping to shape expectations and foster linkages across institutions and markets. Finally, transparency sets the ground for careful and consistent decision-making, reducing the scope for arbitrary decisions. Empirical research (Arnone et al., 2007), finds a positive correlation between the transparency of the supervisor and the effectiveness of banking supervision.

Banking supervision was not always tasked to the central bank, with many central banks lacking a clear mandate for macro prudential policies. As it comes to advanced economies, the common practice before the crisis was generally characterized by separation in responsibilities with respect to monetary policy and banking supervision, delegating each function to a different regulator. Looking at EU, the integrated model of supervision was predominating across the member states, capturing the form of unified financial and banking oversight under one single national authority, but generally, not the central bank. The situation was quite different in emerging countries where central banks tended to be the main micro prudential supervisor for banks. In response to the crisis, there was a visible convergence in both, advanced and emerging economies, towards integrated supervision under the common roof of the central bank, usually by using the “new” formula of  BIS central bankers’ speeches  1  macro-supervision. The role of sound supervision was endorsed as absolutely vital for promotion and maintenance of healthy financial system, while central banks got recognized as leading protagonists in the area of prevention, management and resolution of financial crises. Thus, in 2010, the US has passed the Dodd-Frank Act redesigning the role of FED in financial supervision, while in EU there is an ongoing process towards a banking union assigning banking supervision to the ECB together with the national supervisory authorities of the participating member states.