The Supervisory Implications of Financial Globalization: Three Views
"Clearly the financial system
has been undergoing dramatic
and far reaching changes in
the decade of the 1980s. And
equally clearly, the supervisory
and regulatory framework must adapt to
this rapidly changing environment... Some
major evolutionary trends have emerged in the
1980s that appear to me to be irreversible and
to carry important supervisory implications.
First, geographic barriers to competition have
been falling, both in the U.S. and abroad.
Among the more noteworthy developments are
the growth in interstate banking in the U.S.,
the prospect of dramatic reductions in barriers
to financial services competition within the
European Community as 1992 approaches, and
the strategic positioning of banking and securities
firms in key global markets. These
changes will inevitably result in an expansion
in the geographic scope of the lead supervisor's
responsibility, and call for much closer
coordination among supervisors in different
jurisdictions. Implicit in such coordination is
the need to develop mechanisms for the broad
exchange of supervisory information among
different authorities.