WORLD WELCOMES WATCHDOGS
The era of deregulation is over. Inhabitants of the world's financial markets must now brace themselves for something new: reregulation.
For the last thousand days, the winds of deregulation have swept away all manner of controls and barriers and restrictive dealing practices.
But regulators, academics and politicians are growing progressively more worried about the changes they've unleashed, uncertain about their effects and afraid of their impact on a banking system still recovering from the debt crisis. The regulatory pendulum, which had swung without resistance towards more liberal and open markets, is swinging back very fast. The message for bankers and bank customers is clear. One: prepare for much tighter supervision. Two: abandon hope of any further major liberalizations in the regulatory and legal structure, particularly in the United States. Representative James Cooper, a House Banking Committee member, told Euromoney: "Deregulation is now a dirty word."
In April, the Bank for International Settlements (BIS) issued a 270-page report prepared by a study group of central bankers chaired by Sam Cross, executive vice president of the Federal Reserve Bank in New York.
The Cross Committee explored recent innovations in international banking and pointed out that information about credit and money was becoming less and less complete as the markets invented more tradable securities to take the place of bank loans.