In this paper, we discuss pros and cons of different models for financial market regulation and supervision and we present a proposal for the re-organisation of regulatory and supervisory agencies in the Euro Area. Our arguments are consistent with both new theories and effective behaviour of financial intermediaries in industrialized countries. Our proposed architecture for financial market regulation is based on the assignment of different objectives or "finalities" to different authorities, both at the domestic and the European level. According to this perspective, the three objectives of supervision - microeconomic stability, investor protection and proper behaviour, efficiency and competition - should be assigned to three distinct European authorities, each one at the centre of a European system of financial regulators and supervisors specialized in overseeing the entire financial market with respect to a single regulatory objective and regardless of the subjective nature of the intermediaries. Each system should be structured and organized similarly to the European System of Central Banks and work in connection with the central bank which would remain the institution responsible for price and macroeconomic stability. We suggest a plausible path to build our 4-peak regulatory architecture in the Euro area.
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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number
517.
Find related papers by JEL classification: G20 - Financial Economics - - Financial Institutions and Services - - - General G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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