The Federal Reserve Bank of San Francisco is responsible for coordinating the supervision of all U.S. operations of 38 Foreign Banking Organizations (FBOs), including key institutions from Japan, Korea, Taiwan, Hong Kong, Philippines, Malaysia, India, and France, and examining 115 offices of the FBOs located within the District. In 2000, the Banking Supervision and Regulation (BS&R) Division continued to execute its robust international program, focusing on three primary areas: supervising FBOs, analyzing financial sector developments in key Asian and European countries, and providing technical assistance and training to Asian supervisory authorities.

To strengthen FBO supervision, BS&R’s Country Analysis Unit (CAU) works closely with foreign supervisors, meeting regularly to share information on supervisory standards and procedures. For instance, CAU initiated and hosted a System meeting with the Japanese Financial Supervisory Authority to discuss the condition of major Japanese banks operating in the U.S. and understand more about the changing Japanese bank supervision process. Information gleaned at this meeting was used to refine and update the supervisory strategy for Japanese FBOs. CAU analysts participate on fact-finding trips to key Asian countries and coordinate technical assistance and training programs for foreign supervisors.

An example of CAU’s special analyses for 2000 includes a series of papers on Japan entitled, A Look at Japan’s Changing Financial Landscape: Implications for Japanese City Banks. The series highlighted structural changes underway in Japan, analyzed how they affect the banking sector, and reviewed the supervisory implications. The papers stimulated a discussion within the Federal Reserve about emerging trends in Japan and our supervisory strategy for Japanese banks in 2001 and beyond. Other papers explored the aftermath of the Asian financial crisis, including Foreign Bank Acquisitions in Asia, which reviewed the efforts of major global banks and financial institutions to expand into Asia following the crisis, and Changes in Bankruptcy Law in Indonesia and Thailand, which reviewed bankruptcy code changes and their implications in these countries.

Pacific Basin Monetary and Economic Studies

In 2000, the Economic Research Department’s Center for Pacific Basin Monetary and Economic Studies continued its mission of promoting research on relevant economic issues and enhancing cooperation among the region’s policymaking institutions. Research studies were completed on a range of topics, including analyses of Japan’s banking sector and regulatory policy, early warning indicators of currency crises, macroeconomic performance under different exchange rate regimes, and the impact of international capital flow controls. Center staff members also edited and arranged commercial publication of a volume of papers prepared by distinguished economists for the Center’s conference on Financial Crises in Emerging Markets held in September 1999. Scheduled for publication by Cambridge University Press, the book is the third in a series of the Center’s conferences that have been published by Cambridge Press.

Among the Center’s other activities, it collaborated for a second consecutive year with the World Bank to organize a week-long training workshop for senior policymakers on the subject of "Managing Capital Flows" that was held in Bangkok, Thailand. The workshop sessions addressed the problems of managing capital flows and dealing with financial crises and contagion, and also addressed special topics, such as monitoring derivatives activity. The audience included more than 50 experienced policymakers from over 30 countries in Asia, Africa, and Eastern Europe. In addition to Center staff members, other speakers came from the World Bank, the OECD, the European Investment Bank, and Asian central banks. Center staff members also made presentations at various conferences in Asia, including programs organized by the Asian Development Bank Institute in Tokyo, the Australian National University and IMF in Canberra, the Reserve Bank of Australia, and the Hong Kong Monetary Authority.