Understanding Financial Regulation

This Article has presented a framework to understand how regulators approach financial regulation. The framework suggests regulators must address three questions: what strategy, what task, and what source. What strategy refers to rulemaking, supervision, certification, or enforcement; what task refers to defining content, facilitating compliance, and pursuing enforcement; what source refers to public or private completion of the regulatory strategy. To this end, the framework provides the regulator with a menu of choices from which to select an appropriate regulatory strategy.

One important application of the framework is to facilitate the cooperation and coordination of financial regulation across borders. One of the main difficulties in eliminating the regulatory barriers that prevent the provision of cross-border financial products and services is determining whether financial regulatory systems are comparable to each other. The framework of regulatory strategies presented in this Article offers a Rosetta Stone pursuant to which we can break down and compare the regulatory approaches different regimes follow.