Český finanční a účetní časopis 2006(4):8-22 | DOI: 10.18267/j.cfuc.191

Comparison Models of the Financial Regulation and Supervision: Advantages and Disadvantages

Petr Musílek
Prof. Ing. Petr Musílek, Ph.D. - profesor, Katedra bankovnictví a pojišťovnictví, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3; <musilek@vse.cz>.

This paper surveys the institutional arrangement of the financial regulation and supervision. Financial markets channel funds from savers to borrowers by expediting the creation and trading of financial instruments. Financial markets consist of numerous smaller financial submarkets that specialize in different types of financial instruments, different types of customers. The future of financial markets can see in the consolidation of the financial institutions. There are four fundamental objectives of financial regulation. The first is to ensure the safety and credibility of the financial institutions. Second, the central bank uses regulation to provide financial stability. The third objective is to provide an efficient and competitive financial system. Finally, financial regulation should protect consumers from abuses by financial institutions. There are many models of the institutional arrangement of the financial regulation and supervision. Financial theory indicates a wide variety of institutional arrangements, suggesting that is no universal ideal model. Model of the regulation and supervision do not guarantee better supervision. More rational structures may help, but, fundamentally, more efficient supervision comes from independent and transparent supervisory body with bettertrained staff and better enforcement, supporting the development of the financial market.

Keywords: Financial Markets; Financial Conglomerates; Financial Regulation and Supervision; Integration of the Supervision.
JEL classification: G18, G2

Published: December 1, 2006  Show citation

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Musílek, P. (2006). Comparison Models of the Financial Regulation and Supervision: Advantages and Disadvantages. Czech Financial and Accounting Journal, 2006(4), 8-22. doi: 10.18267/j.cfuc.191
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