New Challenges for Regulation of Global Financial Markets
This chapter starts by describing recent trends in private financial markets, both globally and in developing countries. Then it analyses the structural changes that have occurred in global private financial markets — particularly resulting from deregulation and liberalisation — and attempts to evaluate their benefits and costs. Based on this analysis, it attempts to define the increase — and change in the nature of — risk, particularly of a systemic type. Special reference is made to risks as they affect LDCs. The chapter then reviews some of the main aspects of the supervisory and regulatory response to the changes in financial flows and, above all, to changes in perceived risk which they generate. Finally, conclusions are drawn and policy recommendations made, the latter going from those which are fairly widely accepted (but not implemented) to those which would be more innovative.
KeywordsFinancial Institution Systemic Risk Capital Requirement Market Risk Security Market
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