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From regulation to over-regulation and back - How to break the vicious circle




As I collected papers on the subject of regulation in order to prepare this article, I was struck by the number of regulatory projects that have become reality over the past twelve months in Switzerland. Mentioning this fact to a well-known lawyer, he answered: ‘That’s life! Nothing can be done about it. Although they keep moaning, banks get used to it, don’t they?’ In a way, he was probably right: regulation rarely drives banks out of business. But I still thought that his comment was too optimistic. Do banks really get used to endless new regulations? If this were the case, why would the chairman of HSBC keep complaining about the huge regulatory costs incurred by his group? Why would the head of ING talk about ‘regulatory fatigue’ as he recently did in the Financial Times?1 Clearly, this is not only a burden for small banks but also for big ones. Perhaps regulation is a bit like a chronic illness: one lives with it, but it ruins one’s quality of life! Taking Swiss private banking as an example, this paper will explore how to break free from the vicious circle of ever-growing regulation.

Suggested Citation

  • Dérobert, Michel Y., 2005. "From regulation to over-regulation and back - How to break the vicious circle," Journal of Financial Transformation, Capco Institute, vol. 15, pages 70-75.
  • Handle: RePEc:ris:jofitr:0951

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    References listed on IDEAS

    1. Ricardo J. Caballero & Emmanuel Farhi & Mohamad L. Hammour, 2006. "Speculative Growth: Hints from the U.S. Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1159-1192, September.
    2. Martin S. Feldstein, 2007. "Housing, Credit Markets and the Business Cycle," NBER Working Papers 13471, National Bureau of Economic Research, Inc.
    3. Eugene N. White, 2004. "Bubbles and Busts: The 1990s in the Mirror of the 1920s," FRU Working Papers 2004/09, University of Copenhagen. Department of Economics. Finance Research Unit.
    4. Kevin J. Lansing, 2007. "Asset price bubbles," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct26.
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    More about this item


    regulation; over-regulation; EU; Switzerland; banks; legislation;

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General


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