This involves the NBH being given a more concrete task than previously for the financial intermediary system: of developing a macro-prudential policy to make the system more stable and robust so that it can continue to contribute to economic growth in the country.
The regulations setting out the NBH’s new powers essentially repeat the old FSA supervisory rules for financial, capital and insurance market surveillance functions and consumer protection and market surveillance. It was explicitly stated when drafting the new regulations that they would not involve any material change in practice or procedure for market participants.
The Financial Mediation Board will continue to provide out-of-court mediation for financial services disputes, maintaining the guarantee frameworks of mediation boards, but will now do so under the auspices of the NBH.
The NBH’s organisational structure will change through the introduction of the Financial Stability Council, with different functions and modus operandi than previously, to work alongside the Monetary Council, the Board of Directors and the Supervisory Board.
The MC will remain the supreme decision-making body, and will ensure that price stability remains the NBH’s priority in all its decision-making and operations, alongside its new financial supervisory functions and powers. Thus, as well as continuing its former role, the MC will set the strategic frameworks for micro- and macro-prudential oversight within which the FSC must operate. The NBH’s board of directors will then be responsible for coordinating the implementation of FSC decisions.
Also transferred from the FSA are rules governing the NBH’s dealings with the European Commission and supervisory authorities of other member states, and in coordinating combined supervisory tasks and cooperating with financial supervisory authorities in non-EU countries.
The NBH will take on the FSA’s obligation to provide information to the relevant parliamentary committee, to allow proper parliamentary oversight of its activities. It will also acquire the FSA’s power to enforce rights of public interest, giving it the full range of supervisory measures available to its predecessor.
It will also receive the supervisory fees paid by financial institutions that were previously payable to the FSA, with very similar payment rules to those in operation previously. This will involve payments being directed to a new bank account number but the same contact and other details used with the FSA will continue to apply.
The NBH’s governor will be given the FSA’s former powers to issue decrees regulating the legal aspects of micro-prudential tasks, although these will now rank higher than previously in the hierarchy of laws (on the same level as government decrees).
The NBH’s central banking tasks remain untouched, so it will continue exactly as before to:
- decide and implement monetary policy
- issue bank notes and coins
- make and hold foreign currency and gold reserves for official purposes
- execute foreign currency transactions to manage foreign currency reserves and implement exchange rate policy
- oversee payment and settlement and securities clearance systems (and set up such systems),
- collect and publish the statistical data necessary to perform its tasks
The NBH has announced that, from 1 October, all financial institutions’ responsibilities towards the FSA will be performed to the Bank on the same conditions (with the same form, content and deadlines). All FSA decrees will ultimately be repealed but will remain temporarily effective until the end of 2013 as a transitional measure, to give the NBH time to produce its own updated versions to come into force in January 2014.
Law: Act CXXXIX of 2013 repealing and replacing Act CLVIII of 2010