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Financial Market Regulation: The Case of Italy and a Proposal for the Euro Area

Author

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  • Giorgio Di Giorgio
  • Carmine Di Noia
  • Laura Piatti

Abstract

The objective of the present work is to sketch a proposal for the re-organisation of regulatory arrangements and supervisory agencies in the European financial markets. This proposal is formulated in light of the evolution of the role of intermediaries and aims at speeding the ongoing process of integration of financial markets in the Euro area. It is based on previous experiences in the matter of financial regulation at both national and international level. We start by reviewing objectives and theoretical models for the regulation of financial systems. We then move to highlight some features of financial market regulation in Italy that we consider somehow problematic as a consequence of the recent evolution in the financial intermediaries, instruments and markets. A proposal is then formulated for a new configuration for supervising the domestic financial market through the assignment of different objectives or "finalities" to different authorities. This perspective would thus entrust the three objectives of supervision -- stability, transparency and proper behaviour, competition -- to three distinct authorities designed to oversee the entire financial market regardless of the subjective nature of the intermediaries. We think that our proposal could be transferred (with some benefit) to the Euro area. This requires to explicitly address what is probably the weakest point and the more evident problem of the European Union construction, that of who takes care of financial stability. In particular, one has to re-examine the issue of the need for a lender of last resort and of the proper relationship of the European Central Bank with other financial market regulators. We propose to establish a European System of Financial Supervisors, with three distinct independent authorities (plus the ECB) at the European level. They will provide incentives for and co-ordinate the work of the three corresponding national authorities in each member country.

Suggested Citation

  • Giorgio Di Giorgio & Carmine Di Noia & Laura Piatti, 2000. "Financial Market Regulation: The Case of Italy and a Proposal for the Euro Area," Center for Financial Institutions Working Papers 00-24, Wharton School Center for Financial Institutions, University of Pennsylvania.
    • Handle: RePEc:wop:pennin:00-24
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    File URL: http://fic.wharton.upenn.edu/fic/papers/00/0024.pdf
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    References listed on IDEAS

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    Cited by:

    1. Vashishtha, Ashutosh & Sharma, Anil K., 2012. "Indian financial market regulation: A dialectic model," Journal of Economics and Business, Elsevier, vol. 64(1), pages 77-89.
    2. Masciandaro, D. & Nieto, M. & Prast, H.M., 2007. "Financial Governance of Banking Supervision," Other publications TiSEM 65d7ff26-dca3-4da3-86ff-6, Tilburg University, School of Economics and Management.
    3. Monkiewicz Jan, 2009. "Enterprise Management and Regulation of Economic Activity: The Case of Insurance," Foundations of Management, Sciendo, vol. 1(2), pages 129-142, January.
    4. Di Johnson & John Rodwell & Thomas Hendry, 2021. "Analyzing the Impacts of Financial Services Regulation to Make the Case That Buy-Now-Pay-Later Regulation Is Failing," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    5. Jagoda Anna Kaszowska & Tomás Mancha Navarro & Juan Luis Santos, 2014. "Institutional and regulatory changes in the financial markets after the crisis emergence (2007-09)," Working Papers 02/14, Instituto Universitario de Análisis Económico y Social.
    6. Kelvin Onwuka & Anayochukwu Basil Chukwu & Tobechi Faith Agbanike, 2021. "Current account and financial reforms: Evidence from sub‐Saharan Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4303-4314, July.

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