Search Results

You are looking at 1 - 10 of 46 items for :

  • "agency independence" x
Clear All
Mr. Michael W Taylor, Mr. Marc G Quintyn, and Ms. Eva H. G. Hüpkes
Policymakers' uneasiness about granting independence to financial sector regulators stems to a large extent from the lack of familiarity with, and elusiveness of, the concept of accountability. This paper gives operational content to accountability and argues that it is possible to do so in a way that encourages and supports agency independence. The paper first elaborates on the role and purposes of accountability. Second, it shows that the unique features of financial sector supervision point to a more complex system of accountability arrangements than, for instance, the conduct of monetary policy. Finally, the paper discusses specific arrangements that can best secure the objectives of accountability and, thus, independence. Our findings have a wider application than financial sector supervision.
Mr. Michael W Taylor, Mr. Marc G Quintyn, and Ms. Eva H. G. Hüpkes

of authority too far. Moreover, theories of regulatory capture ( Stigler, 1971 ) also continue to make an impact on the debate. These theories entail that, without proper political oversight and control, regulators will act to promote industry interests at the expense of those of consumers. At the same time, an element of self-interest may be discernible in politicians’ reluctance to grant agency independence, as is suggested by the formal model recently developed in Alesina and Tabellini (2004) . The model explains that politicians choose to retain (as opposed

Mr. Michael W Taylor and Mr. Marc G Quintyn

of accountability need to be established as the countervailing power to agency independence. Although an increasing number of papers are being written about regulatory and supervisory issues, RSI has not been discussed in a systematic way. A survey of the existing literature indicates that scholars either make only a passing mention of it, or take its desirability for granted without much further analysis. 2 The reasons why regulatory independence might be desirable and the conditions under which it can be achieved have not hitherto received a thorough

Mr. Michael W Taylor and Mr. Marc G Quintyn
Despite its importance, the issue of financial sector regulatory and supervisory independence (RSI) has received only marginal attention in literature and practice. However, experience has demonstrated that improper supervisory arrangements have contributed significantly to the deepening of several recent systemic banking crises. In this paper we argue that RSI is important for financial stability for the same reasons that central bank independence is important for monetary stability. The paper lays out four key dimensions of RSI-regulatory, supervisory, institutional and budgetary-and discusses ways to achieve them. We also discuss institutional arrangements needed to make independence work in practice. The key issue in this respect is that agency independence and accountability need to go hand in hand. The paper discusses a number of accountability arrangements.
Mr. Michael W Taylor and Mr. Marc G Quintyn

Front Matter Page Monetary and Exchange Affairs Authorized for distribution by David S. Hoelscher Content I. Introduction II. Experiences with Lack of Independence III. The Case for Agency Independence A. The Case of Financial Regulation and Supervision B. The Case for Agency Independence IV. Independence—Its Four Dimensions A. The Four Dimensions of Independence B. Overview of Arrangements V. Independence—Making It Work A. Independence and Institutional Arrangements B. Independence and Political Checks and Balances

Mr. Michael W Taylor, Mr. Marc G Quintyn, and Ms. Silvia Ramirez
Compared with the case of central bank independence, independence for financial sector supervisors remains more controversial. This paper analyzes changes in independence and accountability arrangements in a set of 32 countries that overhauled their legal and/or institutional frameworks for supervision in recent years. Despite improvements, there is strong evidence that the endorsement of independence remains half-hearted, which shows itself through either overcompensation on the accountability side, or resort to political control mechanisms. The latter could potentially undermine the agency's credibility. The results indicate that policymakers still need to be persuaded of the long-term benefits of independence for financial sector soundness, and of the potential for a virtuous interaction between independence and accountability, if the arrangements are well-designed.
Mr. Michael W Taylor, Mr. Marc G Quintyn, and Ms. Silvia Ramirez

The operational aspects of RSA independence only began to receive sustained attention in the new millennium. Quintyn and Taylor (2003) defined four essential dimensions of RSA independence—regulatory, institutional, supervisory, and budgetary. Hüpkes, Quintyn, and Taylor (2005b) subsequently emphasized that (i) proper accountability arrangements are needed to make agency independence effective; and (ii) a complex undertaking, such as financial sector supervision, needs an elaborate set of accountability arrangements— arguably, more elaborate than the

Mr. Udaibir S Das and Mr. Marc G Quintyn
Good regulatory governance in the financial system is a critical component of financial stability. Research on the topic has not been very systematic and deep. This paper first defines four key components of regulatory governance-independence, accountability, transparency, and integrity. It explores the quality of regulatory governance based on the financial system evaluations under the Financial Sector Assessment Programs (FSAPs), which are the first and most comprehensive effort to analyze regulatory governance issues. In terms of independence, banking supervisors are ahead of the others, while securities regulators perform better on transparency. Insurance regulators are weak in all the regulatory governance components. On the whole, regulators still have a long way to go in terms of practicing good governance. The paper also discusses governance issues specific to crisis management and concludes with an agenda for further research.
Mr. Michael W Taylor, Mr. Marc G Quintyn, and Ms. Silvia Ramirez