Despite the intense debate on the advantages and disadvantages of adopting integrated supervision that has taken place in recent years, little is known about the experiences of countries that have adopted it and the obstacles and challenges they have faced to implement it. In an attempt to shed light on this area, the authors present the results of a survey conducted in a group of 15 countries that have adopted integrated supervision. After a brief review of the literature on integrated supervision, the authors examine four topics: 1) The reasons cited by this group of countries for establishing an integrated supervisory agency. 2) The scope of regulatory and supervisory powers of these agencies. 3) The progress of these agencies in harmonizing their regulatory and supervisory practices across the intermediaries they supervise. 4) The practical problems faced by policymakers in adopting integrated supervision. The survey revealed that the group of integrated supervisory agencies is not as homogeneous as it seems. Important differences arise with regard to the scope of regulatory and supervisory powers the agencies have been given. In fact, contrary to popular belief, less than 50 percent of the agencies can be categorized as mega-supervisors. Another finding is that in most countries progress toward the harmonization of prudential regulation and supervision across financial intermediaries remains limited. Interestingly, the survey revealed that practically all countries believe they have achieved a higher degree of harmonization in the regulation and supervision of banks and securities companies than between banks and insurance firms. The survey also identified some practical problems faced by this group of countries in establishing their unified supervisory agencies. The authors discuss these problems, along with the practical lessons and recommendations provided by the 15 agencies to other countries considering integrated supervision, in the final section of the paper.
Over the past two decades, there has been a clear trend toward integrating the regulation and supervision of banks, nonbank financial institutions, and securities markets. This paper reviews the international experience with integrated supervision. We survey the theoretical arguments for and against the integrated supervisory model, and use data on compliance with international standards to assess the validity of some of these arguments. We find that (i) full integration is associated with higher quality of supervision in insurance and securities and greater consistency of supervision across sectors, after controlling for the level of development; and (ii) fully integrated supervision is not associated with a significant reduction in supervisory staff.
In the wake of the financial crises of the late 1990s, there was a surge of interest in the systematic assessment of financial sectors, with a view to identifying vulnerabilities and evaluating the sector's developmental needs. Consequently, there has been an increased demand from financial sector authorities in many countries for information on key issues and sound practices in the assessment of financial systems and the appropriate design of policy responses. In response, Financial Sector Assessmsnet presents a general analytical framework and broad guidance on approaches, methodologies and key techniques for assessing the stability and development needs of financial systems. It synthesizes current global sound practices in financial sector assessment.
That different types of financial services and products continue to spring up in the financial sector of many countries is indicative of the changing landscape of the financial services industry globally. Equally important, as indicators of the evolving trajectory of financial services regulation, are increases in the number of countries where universal banking is practiced and in numbers of parent and subsidiary companies providing different types of financial services and products. This book is written against that background. A central thesis pursued in the book is that until there is a longer track record of experience with unified regulators, it is difficult to come to firm conclusions about the restructuring process of regulators, and the optimal internal structure of such agencies. In addition, the book examines the concept of an independent regulator, showing how this concept, as a corollary to the concept of a unified regulator, could strengthen the regulatory and institutional framework for financial services supervision if accountability were to be part of such a framework.
Mirroring the long-established structure of the financial industry, EU financial regulation as we know it today approaches banking, insurance and investment services separately and often divergently. In recent decades however, the clear separation between financial sectors has gradually evaporated, as business lines have converged across sectors and FinTech solutions have emerged which do not fit traditional sector boundaries. As the contours of the traditional tripartition in the financial industry have faded, the diverging regulatory and supervisory treatment of these sectors has become increasingly at odds with economic reality. This book brings together insights developed by distinguished researchers and industry professionals in a series of articles analysing the main areas of EU financial regulation from a cross-sectoral perspective. For each specific research theme – including prudential regulation, corporate governance and conduct of business rules – the similarities, as well as gaps, overlaps and unjustifiable differences between banking, securities and insurance regulation, are clearly presented and discussed. This innovative research approach is aimed at informing lawmakers and policymakers on potential improvements to EU financial regulation whilst also supporting legal and compliance professionals applying the current framework or looking to streamline compliance processes.
During the twentieth century the financial sector became possibly the most regulated area of the economy in many advanced and developing countries. The interwar years represented the defining moment for the escalation of governments' intervention, turning the State into the core of financial systems in its capacity of regulator, supervisor or owner. The essays in this collection shed light on different aspects of the experience of financial regulation, ownership and deregulation in Europe and the USA from a secular historical perspective. The volume's chapters explore how the political economy of finance changed in the nineteenth and twentieth centuries and how such changes were related to shifting attitudes towards globalization. They also investigate how regulation responded to governance problems of financial intermediaries and markets, and how different legal frameworks and institutional architectures influenced such response. The collection engages with a set of issues as diverse as they are interrelated across countries and over time: the regulatory attitude of British authorities toward the banking system and the stock exchange market in the nineteenth and twentieth centuries; the comparative evolution of bankruptcy laws and procedures; the link between state, regulation and governance in the evolution of the US and French financial systems; the emergence of banking regulation and supervision by central banks; the regulation and supervision of international financial markets since the 1950s; and the connection between deregulation and banking crises at the end of the past century. Taken as a whole, the chapters offer an intriguing insight into the differing ways western countries approached and responded to the challenges of the international financial system, and the legacy of this on the modern world. In so doing the volume holds up to historical scrutiny the debate as to whether overt state regulation of financial markets always has a negative affect on economic growth, or whether it can be an essential tool for developing nations in their efforts to expand their economies.
The globalisation of financial markets has attracted much academic and policymaking commentary in recent years, especially with the growing number of banking and financial crises and the current credit crisis that has threatened the stability of the global financial system. This major new Research Handbook sets out to address some of the fundamental issues in financial regulation from a comparative and international perspective and to identify some of the main research themes and approaches that combine economic, legal and institutional analysis of financial markets. Specially commissioned contributions represent diverse viewpoints on the financial regulation debate and cover a number of new and controversial topics not yet adequately addressed in the literature. Specifically, these include; financial innovation particularly in the context of the credit risk transfer market, securitization and the systemic importance of the over-the-counter trading markets; the institutional structure of international financial regulation; and risk management and corporate governance of financial institutions. This Handbook will provide a unique and fully up-to-date resource for all those with an interest in this critical issue including academic researchers in finance and regulation, practitioners working in the industry and those involved with regulation and policy.
In light of on-going global financial crises, the institutional structure of financial regulation is currently a subject of significant academic and practical interest. The financial crisis has called into question the adequacy of financial regulation at the national and supranational levels, and has instigated financial regulatory reforms in major markets overseas. This has included the enactment of the Dodd-Frank Act in the US, and the programme to split the Financial Services Authority in the UK. This book examines the institutional structure reform of financial regulation from a comparative perspective, exploring both fundamental theories and international experiences. The book explores the three main institutional structures of financial regulation in the world; the sectors-based model, adopted in the US, Mainland China and Hong Kong; the twin-peaks model with Australia and the Netherlands as its pioneers; and the single-regulator model as represented by the former Financial Services Authority in the UK and the Financial Services Agency in Japan. The book contains contributions from renowned experts in the field of financial regulation including Douglas Arner, Jeffrey Carmichael, Robin Hui Huang, Dirk Schoenmaker, and Michael Taylor, and will be of interest to students and researchers of banking and finance law, and comparative economics.
This publication contains the proceedings of an international conference on the regulation of financial institutions and supervisory structural reforms, held in Washington D.C., United States in December 2003 and involving participants from 52 countries. It considers case studies of experiences of regulatory reform approaches adopted in a number of countries including Australia, South Africa, Ireland, Sweden, Hungary and Estonia.
Following the recent financial crisis, regulators have been preoccupied with the concept of systemic risk in financial markets, believing that such risk could cause the markets that they oversee to implode. At the same time, they have demonstrated a certain inability to develop and implement comprehensive policies to address systemic risk. This inability is due not only to the indeterminacy inherent in the term 'systemic risk' but also to existing institutional structures which, because of their existing legal mandates, ultimately make it difficult to monitor and regulate systemic risk across an entire economic system. Bringing together leading figures in the field of financial regulation, this collection of essays explores the related concepts of systemic risk and institutional design of financial markets, responding to a number of questions: In terms of systemic risk, what precisely is the problem and what can be done about it? How should systemic risk be regulated? What should be the role of the central bank, banking authorities, and securities regulators? Should countries implement a macroprudential regulator? If not, how is macroprudential regulation to be addressed within their respective legislative schemes? What policy mechanisms can be employed when developing regulation relating to financial markets? A significant and timely examination of one of the most intractable challenges posed to financial regulation.
Analyzing ongoing changes in the design of regulatory and supervisory authorities over the banking and financial industry in Europe, this comprehensive Handbook pays particular attention to the role of national central banks, the new financial supervisory authorities and the European Central Bank (ECB).