Regulatory Framework of Financial System Essay

Words: 3660
Pages: 15

Assignment: Discuss the idea that banks will continue to fail even in the presence of supervision clearly articulating what constitutes supervision and regulation for the financial system as well as the rationale for regulating the financial system.
What constitutes supervision and regulation for the financial system?
Banking supervision and regulation provides a forum for regular cooperation on banking supervisory matters; its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision

The core principle for effective banking supervision addresses supervisory requirements relating to banking licensing. The
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There is a risk that transactions may not be conducted at arm's length or that the relationship may be used to distort the financial position of one or more of the institutions.
Structural Impediments to Supervision: The licensing procedure should include an assessment of the ownership structure to determine whether there are elements that will prevent the supervisor from carrying out effective supervision.
The following would indicate that a structure is likely to make it difficult, if not impossible, to carry out effective supervision: * a complex structure that prevents a clear view of the entire business of the group * an inability to determine ultimate beneficial ownership * significant parts of the group operate in jurisdictions where secrecy provisions limit access to information * significant parts of the group's operations are