Here, for the first time, two men who have worked within the system describe its origins and development in clear and accessible terms. Howard Davies was the first Chairman of the UK's Financial Services Authority, the single regulator for the whole of Britain's financial sector. David Green was Head of International Policy at the FSA, after spending thirty years in the Bank of England, and has been closely associated with the development of the current European regulatory arrangements.
Now with a revised and updated introduction, which catalogues the changes made since the credit crisis erupted, this guide to the international system will be invaluable for regulators, financial market practitioners and for students of the global financial system, wherever they are located. The book shows how the system has been challenged by new financial instruments and by new types of institutions such as hedge funds and private equity. Furthermore, the growth in importance of major developing countries, who were excluded for far too long from the key decision-making for a has led to a major overhaul.
The guide is essential reading for all those interested in the development of financial markets and the way they are regulated.
The revised version is only available in paperback.
* Exam copies only available to lecturers for whom the book may be suitable as a course text.
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"A superb account of the international regulatory system,
together with a set of proposals for its reform that are highly
relevant. While largely written before the market disruption that
began in August 2007, subsequent events have tended to reinforce
rather than invalidate most of its prescriptions ... This book is
wholly authoritative and its judgments carefully reasoned."
"An admirable starting point for coming to grips with the
historical and institutional background to the ongoing
"Given the experience of the authors, both of whom have
participated in international regulation for the best part of two
decades, it is of course masterful. It is comprehensive and clear.
It is not easy to describe a structure that has grown
incrementally, mostly in response to crises in one part or other of
the global financial services system but the authors achieve it
with apparently effortless ease."
"The regulatory architecture of international finances has
hardly changed since the book's publication, which will probably
make Global Financial Regulation a useful book for
professionals in the financial markets for a long time to
"This book is both an excellent review of how we got to such an
eclectic mix of regulatory structures around the world and a
provoker of thoughts as to how they could be improved."
Global Risk Regulator
"The authors' ability to cut through the myriad of information
and arguments on topics like Basel II and present the 'essentials'
makes it a lively and easy read. That doesn't mean that it is
simplistic, and even those who are closely involved in regulation
will find it offers some fascinating insights."
"For once the cover does not mislead. This is indeed 'the
essential guide'. It sets out, elegantly but simply, to describe
some of the ways in which international and national financial
market regulation has evolved, some reasons why it evolved and some
reasons why it has failed to keep abreast of innovation."
"A masterful, succinct and superbly clear treatise on financial
regulation. I am sure it will be very well received by regulators,
financial practitioners, academics and their students. This book is
just the type of overview that has been needed for some
David T. Llewellyn, Loughborough University
"Financial regulation matters. We’re all poorer when banks
run amok or markets lurch from crisis to crisis. But most books
about the rules and rule-makers of the financial economy tend to be
dry and impenetrable. Davies and Green have performed an impossible
feat of public service: they have demystified Basel ll, credit
derivatives and all the other jargon of the global financial
priesthood in a lively and entertaining way."
Robert Peston, Business Editor, BBC News
"Global Financial Regulation is a timely review of a subject which engages the attention of both national and international authorities. Howard Davies and David Green bring substantive experience and a strong point of view to the needed debate."
Paul Volcker, former Chairman of the Federal Reserve Board
"Financial regulation has leapt to the top of the international
economic agenda. Seldom can there have been such a well-timed book.
The authors are very distinguished experts and practitioners in the
field. Davies and Green achieve the almost impossible feat of
making 'regulation' interesting."
William Keegan, Senior Economics Commentator, The Observer
List of abbreviations viii
1 The Objectives of International Financial Regulation 7
2 The Current International Regulatory System: Theory and Practice 32
3 The International Financial Institutions and their Role in Financial Regulation 110
4 The European Union: A Special Case 127
5 Regulatory Structures in Individual Countries 155
6 The Debate on Regulatory Structure 187
7 The Need for Reform 214
David Green is Adviser on International Affairs at the Financial Reporting Council.