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Evaluating regulators today- a changing paradigm
Even as The Asian Banker goes into another season of awards evaluation, we realise that much has to be done to review the way we evaluate regulators. We welcome your feedback on this research note.

December 21, 2010 | Arush Chopra

Even as The Asian Banker goes into another season of awards evaluation, we realise that much has to be done to review the way we evaluate regulators. We welcome your feedback on this research note.

Recent events in the global financial system have brought the role of regulation into the spotlight. As events unfolded, starting with the collapse of Lehman Brothers up to the financial crises of Iceland, Greece and Ireland, financial market participants and governments have been forced to react and rethink the role regulators play in maintaining the smooth functioning of ‘too big to fail’ national and international financial systems.

As a result, there have been some profound changes in the very models and structures for regulatory oversight which necessitate a fresh look at how regulators and regulatory systems should be assessed. The Dodd Frank Act, a proposed sweeping overhaul of the US financial system, and plans for the break up of the UK’s Financial Services Authority (FSA) to create a new prudential regulator while assigning the FSA’s other functions to a proposed Consumer Markets Protection Agency are only some of the examples of changes at the national level which have been a direct result of the worst financial crisis in post-war history. Then there are the cross border regulatory reactions such as the Basel Committee for Banking Supervision’s (BCBS) proposals which we are not focusing on for the purpose of this discussion.

This research note seeks to discuss how we should design our models in assessing regulators by what they do rather than how they are constituted. It takes into account the changes in regulation that we see taking place today and the scorecards The Asian Banker has developed to judge regulators taking into account, those changes.

The problem of assessing regulators by their approach to regulation

The various commonly understood regulatory approaches and...

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Categories: Credit Risk, Risk And Regulation Working Group
Keywords: Market Risk, Regulation