future. The NBS as the host supervisor in a small country is prepared and dedicated to efficiently support the consolidated supervisor to perform its tasks. The NBS is also well aware of the restricted influence it has in cross-border cooperation due to the limited impact the local institutions have on the risk profile of the groups of which they are a part.
Since the 2002 FSAP, insurance supervision has also shown an impressive
improvement. As a result, insurance supervision has been found to be generally compliant
with the International Association of Insurance Supervisors’ Insurance Core Principles
(Annex). Most of the 2002 FSAP recommendations have been implemented, in large part by transposing the European insurance directives in national legislation. The insurance supervisory staff of the NBS is fully aware of the both the spirit and the letter of this complex legislation. Collaboration with the Ministry of Finance in drafting legislation has also proven
to be effective. Much effort is put into international cooperation with host supervisors, in order to understand and communicate the possible vulnerabilities within a cross-border operating insurance company, especially in light of the systemic role which some of these companies have in the Slovak market.
Some aspects of the regulation of the second pillar pension system need,
however, to be strengthened. While many regulatory elements, such as investment
regulations, are reasonably restrictive, the areas of governance, risk management, use of
databases, and businesses with related parties seem rather liberal and impose unnecessary risks on pension funds. Although this has not implied a major threat for the pension system until now, regulatory improvements are needed in order to achieve an effective supervision
and a proper incentive structure for PFMCs.
More generally, maintaining adequate and effective supervision in a fast-
changing environment will remain an ongoing challenge. Increasing sophistication and
complexity of market participants and financial instruments will require continuous
upgrading of the skills of the NBS staff and a continuing dialogue of expertise and enhanced
cooperation between Banking Supervision Department and other parties to keep the necessary expertise.
NBS’s Publications on Financial Stability Analysis
Following the broad international trend, in the last four years the NBS began to
produce two reports analyzing financial stability. The Research Department coordinates the preparation of Financial Stability Review (FSR, first published in 2003), and the Banking Supervision Department prepares Report on the Results of Slovak Financial System Analysis (RRSFSA, first issued in 2004). Both reports are published on a semi-annual basis, though the FSR is translated into English only once a year.