The Reform Approach To Financial Regulation Under Post-Crisis Era

Since the seventies of last century, the financial liberalization theory of the financial sector was spawned the Neo-liberalism, deregulation has become the main keynote of financial regulation. But 40 years have passed by, de-regulation not only failed to play down the financial regulation, but more countries pay more attention to this economic intervention.In most countries, the financial industry has undergone some major changes, Financial freedom and deregulation have given great impetus to financial innovation. A variety of financial intermediaries can provide a wealth of financial products and services, traditional banking, securities and insurance, mutual penetration between three ones, the line becomes increasingly blurred between the business in Banking, securities and insurance and financial products .The financial conglomerate has been too big to fail, the financial crisis will come at any time, the level of financial regulation force the trepidation arises spontaneously. In the process of financial globalization, How to control the regulation of the financial industry, not only the scale, carefully grasp of financial risks, in order to achieve financial stability, but also to provide better financial services and protect consumer interests, in order to achieve the financial industry interests. This has not only set out to stay in the past piles of regulatory standards and review of tools at the operational level issues, but developed into a philosophical proposition in global financial system and financial institution in each country.The reform of financial supervision model include two-tier content, one tier is the transform of supervision model from regulation by sector to consolidated regulatory approach. The essence of the transform is the business that been regulated, not the regulation structure. The transform contains two parts, the first one is to turn financial institutions supervision to functional regulation, From the perspective of supervision of financial institutions on the same monitor to different financial institutions to monitor the same business. The second one is to turn functional regulation to Regulation by objective, regulatory perspective from the same business at the operational level of regulation to supervision on the business results, and pay more attention to macro-systemic risk and financial service quality. The other tier is that the financial worldwide regulators have developed the regulatory rules from the regulatory system towards a unified trend. Custody of the financial originally under the sovereignty of a country's administrative functions, but in the process of financial globalization, financial industry, not only cross-mixed operation, while cross-border mixed operation, which gives a country its own monitoring financial risk increases the difficulty of increasing the regulatory costs. This change also at the national level, states generate a demand for regulatory cooperation, States in the regulation of the financial industry, a similar pattern and rules or uniform type of convergence of circumstances gradually appears.As these changes occur, the financial industry to control the power of the executive alone may not be safe, the market self-regulation, litigation similarly constrained financial risk in a positive manner. However, in this paper what we concern about is the modern financial supervision should be concerned, those related to the lifeline of the core financial system, Such as systemic risk, market behavior and other aspects of crisis response, and these core issues by market discipline and judicial remedies to solve is not the reality. Therefore, how to reform regulatory regimes to enhance regulatory efficiency and reduce regulatory costs, both to ensure effective supervision of financial resources without over-consuming, is one of the objectives of this research. As a response to financial market realities, Europe countries, the United States and some developed countries in East Asia began to explore patterns on the reform of financial supervision since the end of the century, and also have passed a major stability to protect the financial system, made comprehensive regulation of financial markets regulation legislation. In this paper, in the background of the financial crisis, based on the integrated financial regulatory analysis and reform of national regulatory approach, using comprehensive comparative analysis, historical analysis, empirical analysis and economic analysis of law approach, Sum up the experience regulatory reform, found that implementation of the regulatory problems encountered in the integration process, analyze the advantages and disadvantages, as our existing financial regulatory reform to provide useful reference. Meanwhile, rethinking pattern of China's financial regulatory problems, find out a set of regulatory reforms for the future operable ideas and models.Chapter 1 is the basic study on the theory of financial regulation and supervision practice patterns, which is the foundation and logical starting point in this paper. In order to improve the effectiveness of supervision, more and more countries began to adopt consolidated supervisory mode, or through the establishment of responsibilities cover all areas of unified financial regulatory agencies, or merger of the two major regulatory bodies, such as progressively unified the banks and securities. Represented by the United States, some countries, while maintaining traditional institutions at all levels of the same regulatory premise, make appropriate adjustments to the regulatory approach. In respect of the huge and complex financial institutions, while providing them with financial services beyond national boundaries to address changes in the financial sector and development, the measures adopted to strengthen supervision of international regulatory bodies also give positive attention to financial regulation. Some international organizations have try to make a resolution to too big to fail of the financial conglomerate, There are two basic approaches to consolidation. The first and simpler approach is to combine two or more sectors of the financial services industry under a consolidated regulatory body, such as the British Financial Services Authority. Alternatively, existing agencies can be reconstituted into new and specialized organizational units designed to advance specific regulatory objectives, like ensuring the fairness and transparency of interactions between financial firms and their customers (sometimes called market conduct) or safeguarding the safety and soundness of financial institutions (often denominated prudential supervision). This second approach is often labeled a"twin-peak"or"multi-peaked"model, depending on how many different regulatory objectives are specified and assigned to separate agencies.Chapter 2 is the study on financial regulation mode which based on the background of the financial crisis. This crisis originated in the U.S., so this section focuses on the U.S. financial regulatory system. Relaxed the rule of law and lack of regulation create this crisis and cause the spread in the whole world. The traditional umbrella regulatory mode was the main reason to the supervision fail. The U.S. financial regulatory mode has been severely criticized after this crisis. The failure of U.S. financial regulators from the U.S. financial regulatory reform over the years has always lagged behind the development of the financial industry, the existing regulators are not keen to grasp the trend of regulatory reform. Although the aim of the old regulatory approach is enhance the existing regulation sectors overseeing competition and reduce the erode possibility, however, this arrangement has caused the power competition between the regulators. The existing system such as Executive compensation, the mystery for the limited liability protective of too big to fail for financial conglomerate, force the bankers Pursuit for interests without care for investors. In thought of the crises, the U.S. began the financial regulatory reform, integration of existing regulatory bodies, establish the objective-based regulatory approach, concerned about the macro-systemic risk, non-bank financial institutions and prudential regulation to protect the financial interests of consumers, and become the reform of financial supervision direction. Although these proposals have not yet finally adopted, but the experience of reform from the United States, we can still get some useful lessons.Chapter 3 is the study based on model of objective-based regulation. With the good performance of Australian regulators in the financial crisis, and the United States in the crisis made reference to the Australian regulatory model with the reconstruction of the country's financial reform program, more and more countries concerned about the Twin-Peaks model. From the financial crisis lessons learned point of view, the power of a single regulatory great, have sufficient permissions to deal day to day supervision. But the failure is the lack of communication between regulatory sectors. Objective-based regulation are not limited to specific regulatory rules, from the entire financial system to begin to realize the risk of full coverage, while the regulatory framework accompanied by two peaks, out of sub-sector regulation and supervision of mixed business debate, there was no overlap because the regulatory objectives The duplication of monitoring the situation. Therefore, the Twin-Peaks model is the article for future reference for the Reform of financial supervision goals. The world model using mainly bimodal regulation in Australia and the Netherlands, this part of the blueprint of the Australian regulatory practice, investigation of their mode of construction and the specific effectiveness of supervision. Therefore, this article aims to draw such a regulatory approach, demonstrate how to begin the regulatory reform in theory on the basis of current regulatory practice.Chapter 4 is a reflection of China's financial supervision mode and study on the future of financial supervision and mode selection. As a transitional period of the country, our economic restructuring and regulation in transition there are still big problems left by history, one of which is executive-led government in the financial regulatory approach holds an important position, while the lack of other regulatory means and methods. This paper argues that the specific mode of China's financial regulators can learn from Australian Twin-Peaks model, from a practical point of view, a consolidated regulatory body, such as the United Kingdom, Japan, this regulatory approach is not suitable for China's national conditions. The reform of financial regulation can be divided into two steps, in the short term through the strengthening of coordination among regulators to deal with mixed operation of financial institutions supervision, in the medium and long term financial legal system to achieve consolidated regulatory approach and integration of regulatory agencies.