Post-crisis regulatory and supervisory arrangements: the new ‘old’ central banking

Abstract

<p>The Global Financial Crisis (GFC) exposed clear gaps in the pre-crisis regulatory<br />and supervisory framework in most of financial systems worldwide, but not in all<br />financial systems. Optimal design of supervisory and regulatory arrangements in<br />the post-crisis perspective requires identifying elements that failed in helping<br />predicting current slowdown, and those that directly or indirectly affected vulnerability<br />of financial markets. Both tasks appear to be as challenging as twelve<br />labours of Hercules: demanding, covering wide aspects of financial and macroeconomic<br />environment, requiring cooperation of many key agents in all markets;<br />hence truly virtually impossible.<br />Instead of identifying ‘failed’ elements, we propose the positive approach to the<br />post-crisis regulatory and supervisory framework, which is proving that some<br />institutional arrangements and basic elements of financial safety net helped some<br />countries avoid the crisis.<br />There are many important questions, which should be treated as a starting point<br />for discussing changes in supervisory and regulatory framework, especially in<br />relation to the central banking. Should central banks become less powerful and<br />be made more subject to political control, or be given more tools to achieve<br />financial stability? Should the trend of removing central banks from direct supervisory<br />responsibilities be reversed? Is the period of ‘central banks’ triumph’, a<br />period in which their independence and autonomy was widely accepted, now<br />over?<br /></p>