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The Perimeter of Financial Regulation

Author

Listed:
  • Ms. Luisa Zanforlin
  • Ana Carvajal
  • Erlend Nier
  • Randall Dodd
  • Michael Moore
  • Ian Tower

Abstract

The G-20 has called for a review of the scope of financial regulation. This call reflects concern that the coverage of prudential regulation has been too narrow. A discussion of extending the regulatory perimeter should, therefore, weigh carefully the experience of the past two years against these considerations. It will also be important to understand whether the assumptions underlying the existing regulatory model for banks are fatally flawed, or whether better regulation and supervision of the banks would be adequate. This set of proposals would represent a major increase in the scope of regulation of institutions, products, and markets. The proposals would best be taken forward as part of a broad program of financial sector reform, including the development of a macroprudential framework for assessing and managing systemwide risk. Even if new regulation is carefully designed to be proportionate to the risks in each new area, there will clearly be increased costs to the system. There would be an increased regulatory burden, which would also carry risks of unintended consequences. The current crisis has clearly shown that the cost of the alternative is also high.

Suggested Citation

  • Ms. Luisa Zanforlin & Ana Carvajal & Erlend Nier & Randall Dodd & Michael Moore & Ian Tower, 2009. "The Perimeter of Financial Regulation," IMF Staff Position Notes 2009/007, International Monetary Fund.
  • Handle: RePEc:imf:imfspn:2009/007
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    Citations

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    Cited by:

    1. André Cartapanis, 2011. "La crise financière et les politiques macroprudentielles. Inflexion réglementaire ou nouveau paradigme ?," Revue économique, Presses de Sciences-Po, vol. 62(3), pages 349-382.
    2. Mr. Giovanni Dell'Ariccia & Mr. Luc Laeven & Ms. Deniz O Igan & Mr. Stijn Claessens, 2010. "Lessons and Policy Implications from the Global Financial Crisis," IMF Working Papers 2010/044, International Monetary Fund.
    3. Ivan Diaz-Rainey & John Ashton & Maz Yap & Murat Genc & Rosalind Whiting, 2015. "The determinants of regulatory responses to risks from financial innovation: Survey evidence from G20," Working Papers 15001, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    4. Myftari, Entela & Rossi, Sergio, 2010. "Prix des actifs et politique monétaire : enjeux et perspectives après la crise financière de 2007-2009," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(3), pages 355-383, septembre.

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