SPEECH Emerging Contours of Financial Regulation: Challenges and Dynamics

The world is currently in the midst of the most severe financial and economic crisis since the Great Depression. Although the crisis originated in the sub-prime mortgage market in the United States, it then spread to Europe and later to the rest of the world. The speed of the contagion that spread across the world is perhaps unprecedented. What started off as a relatively limited crisis in the US housing mortgage sector turned successively into a widespread banking crisis in the United States and Europe, the breakdown of both domestic and international financial markets, and then later into a full blown global economic crisis. Almost all governments and central banks of the world have been busy over the last 9-18 months in an effort to contain the effects of the crisis through both fiscal and monetary policy measures, respectively. Just as the global nature of the crisis is unprecedented, so is the global nature of the response, as exemplified by the coordinated action being committed to by the G-20. Along with the coordinated fiscal and monetary policy actions, a comprehensive re-examination of the financial regulatory and supervisory framework is also underway around the world. Against this backdrop, this paper attempts to analyse the emerging contours of regulation of financial institutions with an emphasis on the emerging challenges and dynamics. The paper is organised as follows: Section I provides a broad overview of the global developments which contributed to the current global financial crisis. Section II presents the ongoing discussion and debate at the international level in the light of the shortcomings of th