EXECUTIVE SUMMARY

In this paper we develop the case for the creation of a single financial supervisory and regulatory authority for the Russian Federation. This case is based on three criteria: (a) it enables economies of scope to be exploited (b) it ensures regulatory parity (c) it satisfies prudential logic The risk management function in banks, investment firms and insurance companies has become extremely complex utilising sophisticated statistical methodologies to analyse market data and credit ratings. Given the need for each of the three sectors to manage their risks using similar data and similar methodologies, there are economies of scope for regulators to adopt a comprehensive approach. This will also ensure regulatory parity. Over the past twenty years elimination of competitive barriers globally has led to increased cross-border and cross-sector competition. Hence in order to avoid disintermediation between sectors and between countries a unified approach will be required. Financial institutions in the three sectors are increasingly interrelated either as counter parties to a transaction or as a division within a conglomerate. Prudential logic suggests that the regulatory function should map onto the actual activities of the financial institutions themselves. Thi