West Palm Beach (HedgeCo.net) – The Group of Thirty released a new report, ‘The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace’.
The report was issued after the meeting of G7 finance ministers and central bank governors in Washington DC. The Group of Thirty is an international body composed of central bank governors, leading economists, and private financial sector experts,
"The financial turmoil that has unfolded over the last year has tested the ability of regulatory authorities to respond effectively to financial crises. It is evident that a number of countries need to revise and reform financial regulatory structures," said Paul Volcker, Chairman of the Group of Thirty’s Board of Trustees.
Volcker underscored that improvement in regulatory approaches is essential at the national and cross-border levels. The G30 report compares and analyses the financial regulatory approaches of 17 jurisdictions, including the UK, the US and Australia, in order to illustrate the implications of the four principal models of supervisory oversight: (1) the Institutional Approach, (2) the Functional Approach, (3) the Integrated Approach, and (4) the Twin Peaks Approach.
The US structure, which falls outside of these four approaches, combines institutional and functional approaches with the added complexity of a number of state level agencies and actors.
Roger W Ferguson, President and CEO of TIAA-CREF, former Vice Chairman of the US Federal Reserve Board and the Vice Chairman of the G30 Working Group, said, "As we start to re-examine regulatory structures, the G30 report can play a role by building the fact base that regulators, politicians, and financial market participants will consider."
In March, the US Treasury released its ‘Blueprint for a Modernized Financial Regulatory Structure’, which proposes a major restructuring of financial supervision toward a regulation by objectives approach, in some ways similar to the twin peaks model to supervision and regulation. The UK has already introduced modifications in its highly integrated approach.
In preparing the report, the G30 conducted interviews with key officials in the relevant jurisdictions, as well as practitioners, regulated parties, and those who may have been involved historically in the development of the current regulatory arrangements.
Alex Akesson
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