Regulatory and Supervisory Independence and Financial Stability

March 1, 2002

Preview Citation

Format: Chicago

Michael W Taylor, and Marc G Quintyn. Regulatory and Supervisory Independence and Financial Stability, (USA: International Monetary Fund, 2002) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Despite its importance, the issue of financial sector regulatory and supervisory independence (RSI) has received only marginal attention in literature and practice. However, experience has demonstrated that improper supervisory arrangements have contributed significantly to the deepening of several recent systemic banking crises. In this paper we argue that RSI is important for financial stability for the same reasons that central bank independence is important for monetary stability. The paper lays out four key dimensions of RSI-regulatory, supervisory, institutional and budgetary-and discusses ways to achieve them. We also discuss institutional arrangements needed to make independence work in practice. The key issue in this respect is that agency independence and accountability need to go hand in hand. The paper discusses a number of accountability arrangements.

Subject: Bank supervision, Banking, Central bank autonomy, Central banks, Economic sectors, Financial regulation and supervision, Financial sector, Financial sector policy and analysis, Financial sector stability

Keywords: Agency independence, Bank supervision, Banking Supervision, Central bank autonomy, Central Bank Independence, Financial Regulation, Financial sector, Financial sector stability, Global, Government interference, Government regulation, Independence arrangement, Monetary policy, Reaction function, Regulatory Agencies, Structural adjustment, Supervisory agency, WP

Publication Details

Pages:

54
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/046
Stock No:

WPIEA0462002
ISBN:

9781451846560
ISSN:

1018-5941

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