TOO MUCH REGULATION?

In: Economic affairs: journal of the Institute of Economic Affairs, Volume 23, Issue 3, p. 21-27

Abstract

This paper considers the purposes that regulation and supervision of financial institutions are designed to serve. Historical experience with regulation and supervision is considered, and it is argued on the basis of that examination that a fairly 'light touch' in regulation is likely to achieve the objectives that governments and citizens require regulation to achieve. Accordingly, the paper concludes that when regulation is evaluated and compared with unregulated systems, one should be careful to compare fallible regulation with fallible markets, rather than implicitly assuming regulation is perfect. Otherwise over‐regulation will result.