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We have concentrated on the current issues linked to the goals of banking regulation and supervision. Attention has been focused mainly on the problem of entry into and exit form the banking sector and the institutional framework banking supervision as a whole. Although we are aware that the present situation in emerging markets is far from that of standard economies, we argue that remarkable progress has been made in creating an appropriate banking system since the beginning of the 1996.

There is no doubt that the same economic regularities are effective in economies in the stage of advanced economic transformation as in traditional market economies. But the low productivity and relics of institutions from the totalitarian system make them very different. Some immature markets of these economies, e.g. labor, money, capital and real property ones, are combined with a huge burden of the non-market public sector, which is mainly borne by budgets of central and local governments. It is not true in any case that any of the former Comecon economies would suffer from an excess of market dictate . It would be worth asking a question to what extent all these economies suffer from market imperfections (e.g. absence of some markets or rent seeking) and from the fact that the government and bureaucracy are still involved in numerous non-market and regulatory responsibilities. As shown by some comparative studies, the government's economic influence significantly goes beyond the scope of their rampant state budgets.

A market-based financial system relies on the existence of prudential, organizational and protective regulations in order to preserve the safety and soundness of the financial system, to ensure its smooth functioning and to provide adequate protection to the users of financial services. The particular business characteristics of banks have important implications regarding the need for their regulation. The need for bank regulation, given the objective of maintaining confidence in the financial system, arises from the fact that banks are uniquely vulnerable to contagious illiquidity and insolvency collapse and their failures can cause severe negative social externalities. This paper describes the Czech derivatives market and discusses the latest approach of the Czech National Bank towards establishing a bank regulatory framework. To put these issues in context, background information is provided on the foreign exchange position of the Czech banking sector, CNB provisions and the foreign exchange market in the Czech Republic.

The transformation of the Czech banking sector was launched on the principles adopted even before November 1989, when the monobank structure of Czech banking was abolished on January 1st, 1990. The former State Bank of Czechoslovakia, which fulfilled the functions of both monetary policy and commercial banking under the conditions of a centrally planned economy, was delimited on that date and the responsibility for monetary policy became its prerogative. The functions of commercial banking began to be fulfilled by the existing commercial banks, until then visibly subordinate to the SBČS (Česká státní spořitelna, Československá obchodní banka, Živnostenská banka in the Czech Republic, and Slovenská Štátna sporitel'ňa in Slovakia), as well as by the newly-established successors to the SBCS in the commercial sphere (Komerční banka in the Czech Republic, Všeobecná úverová banka in Slovakia) supplemented by Investiční banka, already an established bank at that time, which took over some important activities of the former SBČS.

Fostering a strong export sector is essential for the kind of small, open economy like post-communist Czechoslovakia (latterly the Czech and Slovak Republics). The CSFR export sector has to a considerable extent the defied expectations, of many of the more pessimistic commentators in regard to the expansion of exports to the West, as many industries with a previously poor record on the EC market have attained very rapid growth rates of exports to that market. Nevertheless, the evidence of section 3 points to a weakening of the reorientation process in 1992, and raises questions about the future of many of the industries which formerly exported largely to the CMEA area. Whilst the overall level of exports has been largely maintained in the transition period, export growth to the West has not allowed most of the CMEA-oriented industries to maintain their shares in total exports.

The main objective of this paper is to present the results of application of an unconventional valuation method to environmental component quality in the Czech Republic. I have derived resultant valuation after implementation of several steps requiring particularly: analysis of methods simulating nonexistent market valuation in the environmental sector; choice of valuation method and its substantiation; methodological preparation of field research on willingness to pay ; wider interpretation of data acquired by research.