Banking regulations - Modern Banking

The principle objective is to review attempts to regulate internationally active banks through global agreements. This begins with a review of the reasons why governments regulate markets in general, and financial markets in particular. It continues with a discussion of why banks, which are part of the financial system, are singled out for additional regulation. Many of the rules agreed upon by global organisations have become the drivers for domestic regulation. For example, the 1988 Basel agreement (‘‘Basel 1’’) was for international banks operating in OECD countries but authorities in both the industrialised world and some emerging markets have required their domestic banks to adhere to Basel 1 standards. Likewise, ‘‘Basel 2’’ is expected to become a new benchmark for bank supervision.

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