Table of contentsChanges in financial regulationEuropean Union and United KingdomUnited StatesMarket liberalization and domestic regulationInternational regulation and emerging marketsConclusionAfter the 2008 financial crisis, there is much more enthusiasm among policy-making classes for supranational regulation, or, at least, for coordination of regulatory rules. A good example of globally established rules are the Basel Committee rules on bank capital reserves and liquidity rules. However, strong international regulation will harm the competitiveness of some countries because their financial systems and macroeconomic environments are different. Furthermore, the intention of national policymakers too often seems to be “to find a regulatory regime that penalizes competitors more than their own companies” (Stiglitz 2010). Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get an original essay Do you think there is a need for greater international cooperation in the regulation of financial services? A recent report from the International Monetary Fund (2009) explains that the current financial crisis, which many economists consider to be the worst crisis since the economic depression of the 1930s (IHS, 2009), has revealed many weaknesses in the global financial system, which should be strengthened in order to avoid similar situations in the future. According to Mario Draghi, the current president of the ECB, the global financial crisis should be analyzed in such a way as to draw useful lessons from it, because it is obvious that the inability of the banking system to cope with unexpected tensions is the reason for which governments used taxpayers' money to save the banks. (Barua, R. et al., 2010) This is what the Basel Committee on Banking Supervision (BCBS) did and its analysis resulted in a new agreement, known as Basel III, whose The objective is to impose new capital, leverage and liquidity reserves. rules, thereby setting higher standards and increasing transparency within the banking system. (Barua, R. et al., 2010) However, several economists believe that the standards set by the Basel Committee were intended for US and European markets and therefore should not be imposed on developing countries, as they would almost certainly harm their savings. (Masters, B., 2012)Changes in financial regulationBefore the 2008 financial crisis, financial regulation was characterized by two opposing trends, namely specialization and consolidation. Under the influence of specialization, the financial system was seen as a combination of different sectors, each of which should be supervised by a specific body. This process gave rise to better defined financial supervisors that several banks decided to retain, out of concern for prudence. However, other countries and regions, including Europe, the United States and Japan, have opted for the so-called "integrated model." », introducing new reforms aimed at simplifying financial regulation by reducing the number of regulatory and supervisory bodies. With these reforms, the Federal Reserve, the Bank of Japan and the ECB are now responsible for both prudential supervision and monetary stability. (Eijffinger, S. and Masciandaro, D., 2012) As Mavrellis (2011) observed, if financial markets were supervised by regulatory bodies capable of predicting and avoiding crisesfinancial institutions, investors and consumers would be protected. However, for this scenario to become a reality, financial markets would need to be subject to tough policies aimed at increasing transparency and reducing the likelihood of economic contractions detrimental to the real economy. In fact, the current global financial crisis has not only harmed investors. , but also consumers around the world, causing in many countries a serious recession that has not yet come to an end, because globalization has made the world's economies strongly linked to each other. (BBC News, 2012; Rooney, B., 2012; Rampell, C., 2011) In response to the weaknesses in financial supervision and regulation which contributed to the outbreak of the current financial crisis, the BCBS approved a package of reforms (Basel III), including capital and leverage regulations and global liquidity requirements. (Barua, R. et al., 2010) The agreement stipulates that banks will have to hold at least 4.5% of their RWA (risk-weighted assets) in common equity and 6% in Tier 1 capital. It also introduces a countercyclical buffer through which national regulators can require an additional percentage of capital ranging from 0% to 2.5%, particularly in times of credit stress and growth. (Barua, R. et al., 2010) In order to prevent banks from accumulating excessive leverage, the BCBS introduced a liquidity ratio which requires banks to ensure that their cash outflows do not exceed not their cash inflows over 30 days, in order to avoid dangerous mismatches, a leverage ratio of at least 3% and a stable net funding ratio which requires banks to have sufficient liquidity to meet their obligations cash flow in the event of prolonged tensions. (Barua, R. et al., 2010)European Union and United KingdomAs Stichele (2008) pointed out, in 2008, financial regulation in the European Union was still fragmented, as member states still had laws, different regulations and monitoring methods. However, this fragmentation was incompatible with the liberalization of financial markets and the expansion of many banks. Therefore, EU governments began to suggest that financial deregulation and market liberalization, not only at the European level but also internationally, would strengthen European financial regulations. Their motivation was certainly increased by the negative effects of the global financial crisis, which led to an acceleration of the integration process. However, as Hagenfeldt (2011) points out, although the gradual liberalization of EU financial markets has increased financial stability, there could be secondary effects associated with this process, including potential cross-border contamination in in the event of a financial crisis, due to increased interconnectivity between Member States. Regarding relations between EU members and the UK, Benson suggested that they should cooperate to identify the causes that led to the 2008 financial crisis. (Great Britain: Parliament: House of Commons: Treasury Committee, 2011) Regarding measures put in place by EU governments to minimize the effects of the financial crisis and promote integration, in 2011 the UK Treasury Committee and Parliament discussed the government's proposals. aimed at renewing the architecture of financial regulation in the United Kingdom. (Great Britain: Parliament: House of Commons: Treasury Committee, 2011) The proposals place great importance on the credibility of the mediation serviceand, although most of these have been formulated on the basis of domestic issues and needs, the Treasury Committee is aware that the UK is strongly linked to the EU and that domestic financial regulation should not conflict with European or international regulations. (Great Britain: Parliament: House of Commons: Treasury Committee, 2011)United StatesAs Battilossi and Reis (2010) point out, the 2008 financial crisis revealed the weaknesses of the American financial regulatory system, to the point where Many economists and analysts are beginning to consider market deregulation as the best solution to avoid future crises. While the European Union and the United Kingdom have used financial policies and instruments such as liquidity ratios, credit ceilings and credit standards, the United States has approved the law Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and took steps to implement the requirements. set by Basel III in its regulatory architecture. (Battilosi, S. and Reis, J., 2010) Market liberalization and national regulation The numerous financial crises that marked the last century gave rise to calls for new, stricter international financial regulations aimed at regulating financial markets through both structural and legal changes. (Alexander, K. et al., 2005) In fact, although financial markets have been significantly liberalized over the past decades, the liberalization process has not been followed by adequate changes in local and international financial regulation, regulators taking a reactive approach. , rather than a proactive approach, setting new requirements only after the outbreak of financial crises. As Krajewski (2003) observed, when financial markets are liberalized, state/national regulations automatically come under pressure as interconnectivity between markets increases. To the extent that not all countries follow the same legal system, it is obvious that the liberalization process would cause serious difficulties if international rules were not established. This is why Krajewski (2003) argues that liberalized financial markets are incompatible with national regulation and that the only way for governments and institutions to avoid the negative effects of globalization is to establish international standards applicable to all financial markets. was not caused by ineffective macroeconomic policies approved by governments, suggesting that financial crises are not triggered solely by macroeconomic phenomena. In fact, in analyzing the events that led to the subprime mortgage crisis in the United States and the resulting global financial crisis, it is clear that unethical behavior and poor governance of business within the private sector must be seen as the main causes of the difficulties of governments and citizens around the world. the world is still facing. (Hansen, LH et al., 2009) This clearly indicates that the liberalization of financial markets has created a strong link between microeconomic phenomena and macroeconomic contagion, making national regulation to prevent financial crises from spreading across countries virtually impossible. country. al. (2005), the potential impact that microeconomic risk can have on the entire world is reason enough for institutions to focus on international regulation. International regulation and emerging markets With regard to..