#07-34
The Structure of Cross-Sector Financial Supervision
Richard J. Herring and Jacopo Carmassi
Abstract: Central banks are famous (some would say notorious) for their conservatism and bureaucratic inertia. Moreover, as Goodhart (2000) has noted, they have a propensity to argue “that whatever their present structure may be, it is optimal, or at least would be if some slight additional funding and powers could be made available”. Their independence also tends to insulate them from fads or changes in fashion that sometimes affect other institutions. Nonetheless, over the last decade, one traditional aspect of central banking, financial supervision, has been reorganized in ways that can be described as revolutionary. In most major industrial countries and many emerging markets, the financial supervisory functions that were once performed by central banks have been combined with those performed by other official agencies and/or self-regulatory organizations to form a single financial services regulator.
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