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Handbook of Central Banking, Financial Regulation and Supervision

Handbook of Central Banking, Financial Regulation and Supervision

After the Financial Crisis

Elgar original reference

Edited by Sylvester Eijffinger and Donato Masciandaro

This stimulating and original Handbook offers an updated and systematic discussion of the relationship between central banks, financial regulation and supervision after the global financial crisis.

Chapter 6: Central Banks and Banking Supervision Reform

Pierre C. Boyer and Jorge Ponce

Subjects: economics and finance, financial economics and regulation, money and banking


Pierre C. Boyer and Jorge Ponce1 Introduction A series of reform proposals that have been envisaged since the subprime crisis started aim to concentrate regulatory and supervisory powers in the hands of central banks. For example, the Bank of England has received new responsibilities for guarding the overall system’s stability, i.e., ‘macro-prudential supervision’. Yet, the Conservative Party, now in office, has adopted as policy the investiture of full responsibilities to the Bank of England for the prudential oversight of all individual financial institutions, i.e., ‘microprudential supervision’ (see The Conservative Party, 2009). The US Federal Reserve System is accumulating huge control over the economy and banks. The Restoring American Financial Stability Act of 2010 gives the Federal Reserve primary responsibilities for supervising all firms that could pose a threat to financial stability in addition to its responsibilities for monitoring the operations of holding companies – including traditional banks – and for protecting consumers. 1 The views expressed herein are those of the authors and do not necessarily represent the views of the institutions to which they are affiliated. The authors would like to thank the Editors Donato Masciandaro and Sylvester Eijffinger, as well as Germán Cubas, Umberto Della Mea, Alvaro Forteza, Diego Gianelli, Hans Peter Grüner, Friedrich Heinemann, Gerardo Licandro, José Antonio Licandro, David Martimort, Marc Rennert, and Leandro Zipitría for their valuable comments on earlier versions of this chapter. Boyer gratefully acknowledges the Collaborative Research Center 884 for financial support. Boyer is also grateful for the hospitality of the...

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