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The four ages of banking regulation: What to do today?

Author

Listed:
  • Maurizio Trapanese

    (Banca d'Italia)

  • Riccardo De Bonis

    (Banca d'Italia)

Abstract

In illustrating the four ages into which the evolution of banking regulation from the 19th century to today can be divided, this paper underlines the links between the supervisory approaches and the prevailing economic theories in each era, and tries to draw from the historical experience indications for the future. The emphasis is on the age of banking deregulation and the subsequent response to the 2007-08 global financial crisis. As regards the current phase, the work underlines how decisions have been taken in some jurisdictions (e.g., US) since 2018 to introduce deviations from the international prudential standards. It is to these elements that the causes of the crises of some American regional banks in the first months of 2023 can be traced. For the future, attention is drawn to the need for the authorities to resist pressure to deregulate the system, introducing instead the possible corrective measures suggested by the recent crisis cases. At the same time, the importance of proceeding with a reduction of regulatory complexity and of pursuing the right balance between regulatory proportionality and the protection of financial stability is underlined.

Suggested Citation

  • Maurizio Trapanese & Riccardo De Bonis, 2023. "The four ages of banking regulation: What to do today?," Questioni di Economia e Finanza (Occasional Papers) 796, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_796_23
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0796/QEF_796_23.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    economic thought; financial crises; banks; regulation; economic history;
    All these keywords.

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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