The historical development of financial regulatory principles: influences on Asia-Pacific systemic supervision

Abstract

Throughout history finance and its regulation have evolved, yet the underpinning regulatory principles have remained fundamentally static. The first measures were taken to counter market inefficiencies which led to the introduction of conduct regulations to give effect to consumer protection. By the fourteenth century the financial stability principle had been recognized and subsequently developed over the following 600 years, notably in the twentieth and twenty-first centuries. The development of the financial stability principle reached a pinnacle following the 2008–09 global financial crisis as the prevailing regulatory approach was deemed thoroughly inadequate. Insufficient or non-existent systemic risk supervision was central to this assessment. To redress this flaw, systemic supervisors have been introduced. In the Asia-Pacific, central banks are integral to systemic supervision as banking dominates most financial systems. This Chapter analyses systemic supervision in Singapore, Korea, Hong Kong, Australia, New Zealand, Japan, Indonesia, China, the Philippines, Malaysia and Thailand.