Publications

	Table of Contents
p. 47 of 58 BACK | NEXT Purpose and Structure of the Toolkit Part One: Introduction and Overview Part Two: Preconditions and Infrastructure for Financial Sector Development Part Three: Financial Regulation and Supervision I. Financial Stability, Development and Institutional Design II. Financial Regulation: General Principles III. Financial Regulatory Structure IV. Banking Regulation V. Bank Insolvency and Depositor Protection VI. Securities and Derivatives Regulation VII. Insurance and Pensions Regulation VIII. Regulation of Financial Conglomerates A. International Standards B. Joint Forum Compendium of Principles C. Guidance and Recommendations Part Four: Regional Financial Integration Part Five: ADB's Intervention in the Financial Sector Bibliography Glossary and List of Abbreviations Acknowledgements

Financial Sector Legal and Regulatory Toolkit : Part Three: Financial Regulation and Supervision

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C. Guidance and Recommendations

In approaching these issues, while there are not any internationally agreed model laws, treaties, or standards, the EU regional financial arrangements also provide a useful starting point, especially the Financial Conglomerate Supervision Directive [ PDF ]. However, the Financial Conglomerates Supervision Directive adopts an approach based on universal banking, reflecting policy decisions taken in the EU to adopt such a structure. As such, it is most useful for countries which have either adopted such a structure (often civil law jurisdictions) or are considering such an approach.

For countries adopting a policy of strict separation, there is no single model, as individual laws (e.g., banking, securities, insurance) will each include prohibitions and limitations on cross-sectoral activities. In this respect, the most influential design has been that of the United States, which has now been adjusted by statute and case law into a holding company structure. As a result, the purest model of strict separation is that of the People's Republic of China.

With respect to holding company models, United States legislation has been the most influential although it is overly complex and detailed to serve as a strict model. Recent approaches to holding companies which are more accessible include that of the People's Republic of China, Taipei,China, and Poland.

These issues are presently of particular concern to the G-20 as a result of the global financial crisis. It is likely that additional international standards, guidance and arrangements addressing financial conglomerates will therefore emerge in the near future, addressing not only their regulatory treatment but also mechanisms to deal with their failure.

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