DISCUSSION ISSUES ON THE ESSENCE OF BANKING REGULATION AND SUPERVISION

Abstract

One of the strictest regulations in the financial market is applied to banking activities, which is due to the specific characteristics of banks, such as a high degree of dependence on attracted financial resources, implementation of the function of a financial intermediary, insufficient transparency and openness of activities, money laundering problems, etc. This is often the cause of imbalance and a source of instability in the banking system. Added to this are interbank lending, affiliation of banks and connections between their founders, tendency to high-risk operations, which can lead to successive bank bankruptcies in unstable situations. Therefore, a system of restraining, restrictive measures is needed, which will establish mandatory "rules of the game" for all participants in the banking system. At the same time, the establishment of an effective mechanism of banking regulation and supervision is hindered to some extent by the lack of a unified understanding of the essence of the main banking concepts, including inconsistencies in the interpretation of such definitions as "banking regulation" and "banking supervision". The article analyzes the widespread definitions of the mentioned concepts, brings the author's opinions and summarizes the obtained results. Key words: Bank, Banking activity, Banking regulation, Banking supervision, Supervisory authority.