Revisiting the Architectural Framework for Financial Markets Supervision in Europe

Giuliano Castellano
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Giuliano Castellano: CRG - Centre de recherche en gestion - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: Although financial regulation is driven by international standards domestic issues have prevailed in the rethinking of national financial supervision. Applying the tools of comparative law and economics to the different national legal systems and regulatory structures, the thesis revisits the architectural issues. The perspective adopted in thesis enables to introduce a crucial separation, too often neglected and misinterpreted, between regulatory powers and supervisory tasks. To illustrate the concept, comparative law and economics analysis is applied to the institutional arrangements set up in France, Germany, Italy and the UK, with a view to bringing new insights. From the above, the thesis argues that in order to properly assess the different institutional alternatives, the allocation of powers between regulation and supervision together with the interaction with the surrounding legal system shall be looked at in depth. To put to the test the argument, an analysis of the implementation process of the Basel 2 principles in France, Germany, Italy and the UK has been carried out. From such analysis new way of considering the ongoing process of convergence among European financial markets emerges. It questions whether there might still be room for domestic governance styles when financial rules are mainly defined at the global level. Nevertheless, institutional arrangements change according to the environment and they respond to historical needs. Within this framework the institutional phenomena are also considered through a path-dependence approach. Abstract : Although financial regulation is driven by international standards domestic issues have prevailed in the rethinking of national financial supervision. Applying the tools of comparative law and economics to the different national legal systems and regulatory structures, the thesis revisits the architectural issues. The perspective adopted in thesis enables to introduce a crucial separation, too often neglected and misinterpreted, between regulatory powers and supervisory tasks. To illustrate the concept, comparative law and economics analysis is applied to the institutional arrangements set up in France, Germany, Italy and the UK, with a view to bringing new insights. From the above, the thesis argues that in order to properly assess the different institutional alternatives, the allocation of powers between regulation and supervision together with the interaction with the surrounding legal system shall be looked at in depth. To put to the test the argument, an analysis of the implementation process of the Basel 2 principles in France, Germany, Italy and the UK has been carried out. From such analysis new way of considering the ongoing process of convergence among European financial markets emerges. It questions whether there might still be room for domestic governance styles when financial rules are mainly defined at the global level. Nevertheless, institutional arrangements change according to the environment and they respond to historical needs. Within this framework the institutional phenomena are also considered through a path-dependence approach.

Date: 2008-07-16
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Published in 2008

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00403621

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