Methods for Qualitative Exploitation of Banking Sector Assets in The Euro Area Tursunov Rafigali Burgutovich

Аннотация

This article analyzes the ways to ensure and manage asset quality in the banking sector in the Eurozone area. The study looked at modern approaches such as credit risk reduction, NPL level control, Basel III requirements and stress tests. The experience of the eurozone member states is analyzed and practical approaches to improving the stability of banking assets are identified. In addition, a brief comparison with the banking sector of Uzbekistan was made, recommendations were given on the application of best practices in the national system. Keywords: Banking sector, eurozone, asset quality, credit risk, NPL (non-performing assets), Basel III, banking supervision. selective method. The European Central Bank (ECB) has Introduction: In recent years, changes in the global introduced a systematic approach to assessing the financial system have further increased the demand for quality of bank assets. In connection with the transfer stability and reliability in the banking sector. The of the powers of the Single Supervisory Authority to the efficiency and safety of the banking system, especially Single Supervisory Authority over financial market in the euro area, are important drivers of economic participants of the European Union member states. growth. The quality of a bank's assets plays a key role in this process. High-quality assets strengthen the The financial crises that have occurred in the European financial position of banks, reduce risks and expand banking sector in recent years have prompted lending opportunities. regulators to introduce new and more robust supervisory systems. In particular, the European The standards and procedures developed by the Central Bank has developed mechanisms to identify European Central Bank (ECB) and the European Banking and mitigate threats to financial stability [3]. Authority (EBA) ensure that banks are subject to stricter supervision. The article analyzes asset quality Analyzing and managing the risks taken by banks is assurance methods, strategies for dealing with crucial for their stability. Basel III standards are aimed problem assets, and modern approaches used by banks at this very purpose and serve to increase banks' in the region. The article also considers the possibilities resilience to shocks [1]. of applying the Eurozone experience to the banking As Mishkin noted, banks should make decisions taking sector of Uzbekistan. into account not only internal risks, but also Assessment of the quality of bank assets, along with macroeconomic factors [5]. Such an approach ensures assessment of capital adequacy and liquidity, is one of the overall stability of the banking system. The role of the important tools for obtaining comprehensive corporate governance in assessing risks is also of information about the current real state of the bank particular importance [8]. The idea that “reforms and assessing its future viability. In most countries, increase the resilience of the banking sector to shocks” including the Republic of Uzbekistan, such an [1, p. 3] is seen as the basis of current regulatory policy. assessment is carried out during routine supervision Temporary reduction of capital buffers for banks and (off-site supervision and inspection), but, as a rule, it is establishment of profit distribution rules Done How we carried out not by the measurement method, but by a are solving As a result of sanctions, banks have faced International Journal of Management and Economics Fundamental 29 https://theusajournals.com/index.php/ijmef International Journal of Management and Economics Fundamental (ISSN: 2771-2257) difficulties, including limited access to foreign financial Research object. SThe department maintains the markets, blocking of assets, and currency revaluation. activities of commercial banks in the euro area For some banks, this may lead to non-compliance with (Eurozone) and the structure, quality and management capital adequacy buffers, as well as a decrease in system of their asset portfolios. interbank transactions ("stigma effect"). Temporary Research topic. It includes a set of methods, reduction of buffers will allow banks to gradually mechanisms and strategies aimed at ensuring and recognize the damage caused by sanctions and use the improving the quality of assets by banks in the euro freed up resources for lending. As for profit distribution area, including credit risk management, non- rules, we see our task in forming additional performing assets (NPL), [1]: Basel III regulations aim to mechanisms to increase the interest of bank stabilize the banking system (Basel Committee on management in maintaining financial stability in times Banking Supervision, 2011) [1]. of stress. We have temporarily reduced the capital Basel III requirements and other control mechanisms adequacy buffer and the structural importance buffer have been introduced. of credit institutions and banking groups to zero. Methods used in the scientific article Relevance of the topic