A New Institutional Framework for Financial Regulation and Supervision

Andrea Enria and Pedro Gustavo Teixeira

This article was first published as a chapter in Basel III and Beyond, by Risk Books.

15.1 Introduction

This final chapter deals with the institutional framework for financial regulation and the conduct and supervision at the global, European and national levels. The financial crisis had many causes (as detailed in Chapter 1) and provided the basis for a sweeping regulatory reform (Section 15.2). The new rules can however be effective only if accompanied by a new institutional architecture that is geared towards fulfilling the regulatory objectives, scope and approaches.

Accordingly, the chapter describes and comments upon the bodies, structures and processes that are emerging for the implementation of the regulatory reform with regard to both micro- and macroprudential supervision (Sections 15.3 and 15.4).

At the global level, the focus is on the roles of the FSB and the IMF in the formulation, implementation and enforcement of regulatory policies under the guidance of the G20, as well as in the monitoring of the global financial system.

The chapter then analyses at length the established European System of Financial Supervision (see Table 15.2), which comprises three