Market-friendly Regulation<sup>1</sup>

Tommaso Padoa-Schioppa

in Regulating Finance

Published in print March 2004 | ISBN: 9780199270569
Published online July 2005 | e-ISBN: 9780191602542 | DOI:
Market-friendly Regulation1

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This essay argues that the internationalization of financial markets has made authorities more aware of the risks of perverse incentives and the costs of excessive regulation. It explains the concept of market-friendly regulation, then discusses how international cooperation provides the best environment for developing market-friendly regulation. The work of the Basel Committee on Banking Supervision is reviewed as an example of regulation that respects spontaneous changes in the market. Increased cooperation between banking, insurance, and securities regulators is recommended.

Keywords: banking regulation; financial markets; market-friendly regulation; Basel Committee; supervision; globalisation

Chapter.  6530 words. 

Subjects: Financial Markets

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