Handbook of International Banking
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Handbook of International Banking

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Edited by Andrew W. Mullineux and Victor Murinde

The Handbook of International Banking provides a clearly accessible source of reference material, covering the main developments that reveal how the internationalization and globalization of banking have developed over recent decades to the present, and analyses the creation of a new global financial architecture.
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Chapter 20: The Regulation of International Banking: Structural Issues

Richard Dale and Simon Wolfe

Extract

20. The regulation of international banking: structural issues* Richard Dale and Simon Wolfe 1 INTRODUCTION Several recent developments – notably, the breakdown of traditional distinctions between different types of financial activity, the globalization of financial markets and increasing emphasis on systemic stability as a regulatory objective – have prompted policy makers to search for an ‘optimum’ regulatory structure that is adapted to the new market environment. Further impetus has been given to this debate by the radical overhaul of regulatory structures, along quite different lines in the UK, Australia, Japan, the United States and New Zealand.1 This chapter examines alternative ways of organizing the regulatory function in the context of the new financial market environment. Section 2 reviews the objectives, targets and techniques of regulation; Section 3 describes the new market environment and the restructuring of the financial services industry; Section 4 assesses the implications of this new environment for the structure of regulation; Section 5 addresses the international dimension; and the final section provides a summary and conclusion. 2 OBJECTIVES, TARGETS AND TECHNIQUES OF REGULATION Objectives of Regulation The case for regulating financial institutions can be made on three broad grounds. First, there is the consumer protection argument. This is based on the view that depositors and investors cannot be expected to assess the riskiness of financial institutions they place their money with, or to monitor effectively the standard of service provided by such institutions. The consumer protection rationale gives rise to three categories of regulation: first, 572...

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