Gehring

Centralization of financial reg Gehring German edition

Seminar paper from the year 2010 in the subject Economics - Monetary theory and policy, grade: 1,0, University of Mannheim, course: Wirtschaftspolitik, language: English, comment: Touching all aspects of the highly controversial discussion. At first the theoretical advantages and disadvantages of centralization are shortly outlined, with a prevailing context to the financial crisis. Special care is given to the role of incentives for governments and regulators. Different regulatory systems are compared across countries. Proposals for reform are analysed and the role and interest of actors in the EU is highlighted. Many reform proposals are likely to amplify the problem instead of fighting its sources. Finally voting procedures and power allocation in the EU are examined , abstract: Financial regulation has played an unfavorable role in the financial crisis. Many reform proposals conclude from its failure that there is a need for more and tougher rules (Group G30 2009). Consolidating existing regulatory bodies and a centralization of authorities seem to be the ubiquitous answer of many politicians. In the European Union (EU), a reform proposal has gained support by the European parliament (EP) and the European Commission (EC), which would mean additional competences and staff for European bureaucracies. Because it would centralize large parts of regulation and supervision, political arguments focus on the allocation of competences and power. However, it is not sure if the proposed changes would have any effect in preventing future crises. The structure of this paper follows a systematic approach to demonstrate problems with this proposal. At first, I show in chapter 2 that the role of regulation and governments in the financial crisis is ambiguous. What is viewed as market failure was sometimes only a rational response to incentives set by regulation. It is often stated that markets did not work efficiently, and the obvious solution is to rely on governments and regu