Abstract
The financial and economic crisis of 2008 revealed lack of tools and inefficiency of methods used by regulators of leading states to predict and prevent crisis of global proportions. In this regard, national and supranational regulators are trying to introduce new principles for regulation of financial services markets, based on the philosophy of macro-prudential regulation. The paper presents a comparative analysis of institutions and methods of regulation in the USA, UK and European Union. The authors critically analyze the effectiveness of new models of regulators, questioning the benefits of new ones in comparison with previous. They emphasize the necessity to reform not only institutional structure of regulators but methodology of their activities too, as well as, the absence of universal prescription of reforms, coming to conclusion, that each country must choose its own, based on their legal traditions, regulatory system. DOI: 10.5901/mjss.2014.v5n24p285
Highlights
Development of modern principles of regulation arising in the financial services markets was influenced by the complex global economic process of the twentieth century
Modification of the system of macro-prudential analysis is expressed in the rejection of the model of a ‘single regulator’, which has proven inability to regulate the threats of the market, because of lack attention to the ‘issues of systemic risk, systemically significant firms and systemic resilience’ [17], in favor of ‘twin peaks’ model
In December 2010 it was created a new independent body, European Systemic Risk Board (ESRB) [41], which is responsible for macro-prudential supervision of the whole EU financial system
Summary
Development of modern principles of regulation arising in the financial services markets was influenced by the complex global economic process of the twentieth century. As said Bernanke: ‘To understand the Great Depression is the Holy Grail of macroeconomics.’[1] Three legislative acts as a response to the financial crisis of 1929-1934 reformed the financial market in the USA The principles underpinning these acts have provided formation of stable financial market and influenced on the development of European legislation [2]. First of all, it was the Glass-Steagal Act of 1933, which separated investment and commercial banking. This Commission established the procedure of accessing to the conduct of professional activities on the securities market, carrying out the control over the activities of brokers, dealers, asset managers and other professional members providing services to third parties. The American ‘post-Great Depression’ legislation created the framework of micro-prudential regulation, which was progressive and efficient until the 2008 financial crisis
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