Designing Optimal Models of Financial Regulation in a Changing Financial Environment

Designing Optimal Models of Financial Regulation in a Changing Financial Environment

Author: Marianne Ojo

Publisher: Nova Science Publishers

Published: 2016

Total Pages: 0

ISBN-13: 9781634848299

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As well as highlighting how corporations and enterprises -- national or multinational -- can be effectively engaged in entrepreneurship and innovation as a means of fulfilling corporate social responsibility goals and objectives, this book aims to propose means whereby auditors (and particularly, external auditors) could more effectively fulfil corporate governance roles through implementation of local, regional, national and internationally recognised codes, regulations, and standards. Whether it is advantageous to regulate both securities investments and consumer financial instruments through a single entity (as is accomplished by the Financial Conduct Authority in the United Kingdom), or through various specialised agencies (as is accomplished in the United States through the Securities and Exchange Commission and the Consumer Financial Protection Bureau) depends on the structure of the "single entity" and whether such an entity is still working as part of a larger entity whose effectiveness is primarily determined by the extent and level of coordination and cooperation with other entities in the supervisory process. As the tripartite arrangement between the Financial Services Authority, Bank of England and the Treasury has revealed, even well-designed regulatory structures are prone to flaws and shortcomings, where resources are inadequately allocated and where the necessary level of communication and coordination is lacking. The structure of financial regulation is hence not only crucial to the success of the attainment of regulatory objectives, but also the extent of involvement, coordination, and cooperation between involved supervisory authorities. Further, the allocation of appropriate tools and resources to those authorities who are best endowed, equipped with the expertise to carry out the required level of monitoring and supervision, as well as clear allocation of such responsibilities, would ensure resources of time and expertise are not wasted, and that responsibilities are not duplicated. As well as highlighting the impact of asymmetric information on levels of monitoring procedures and how conflicts of interests could arise between corporations and their shareholders or between governments and the firms being regulated by the regulator, this book also aims at accentuating the need for the operation of certain vital safeguards, given the merits that are and could be derived from self-governance and self-regulation. Several safeguards that are aimed at bolstering the agent's objectives and actions are closely monitored, as well as aligned with firm investors' desires, encompass and relate to the encouragement of longer term firm economic performance. This also includes increasing shareholder voting power, and the implementation of legislative tools and financial reporting standards as means of determining how effectively executives and management are to be compensated. Finally, this book is also aimed at exploring how these safeguards could be applied, particularly within the context of insider trading and the rationale behind several jurisdictions to adopt or not adopt insider trading regulations. The author seeks to provide the readers with a better understanding of how corporate governance structures can assist businesses.


Book Synopsis Designing Optimal Models of Financial Regulation in a Changing Financial Environment by : Marianne Ojo

Download or read book Designing Optimal Models of Financial Regulation in a Changing Financial Environment written by Marianne Ojo and published by Nova Science Publishers. This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: As well as highlighting how corporations and enterprises -- national or multinational -- can be effectively engaged in entrepreneurship and innovation as a means of fulfilling corporate social responsibility goals and objectives, this book aims to propose means whereby auditors (and particularly, external auditors) could more effectively fulfil corporate governance roles through implementation of local, regional, national and internationally recognised codes, regulations, and standards. Whether it is advantageous to regulate both securities investments and consumer financial instruments through a single entity (as is accomplished by the Financial Conduct Authority in the United Kingdom), or through various specialised agencies (as is accomplished in the United States through the Securities and Exchange Commission and the Consumer Financial Protection Bureau) depends on the structure of the "single entity" and whether such an entity is still working as part of a larger entity whose effectiveness is primarily determined by the extent and level of coordination and cooperation with other entities in the supervisory process. As the tripartite arrangement between the Financial Services Authority, Bank of England and the Treasury has revealed, even well-designed regulatory structures are prone to flaws and shortcomings, where resources are inadequately allocated and where the necessary level of communication and coordination is lacking. The structure of financial regulation is hence not only crucial to the success of the attainment of regulatory objectives, but also the extent of involvement, coordination, and cooperation between involved supervisory authorities. Further, the allocation of appropriate tools and resources to those authorities who are best endowed, equipped with the expertise to carry out the required level of monitoring and supervision, as well as clear allocation of such responsibilities, would ensure resources of time and expertise are not wasted, and that responsibilities are not duplicated. As well as highlighting the impact of asymmetric information on levels of monitoring procedures and how conflicts of interests could arise between corporations and their shareholders or between governments and the firms being regulated by the regulator, this book also aims at accentuating the need for the operation of certain vital safeguards, given the merits that are and could be derived from self-governance and self-regulation. Several safeguards that are aimed at bolstering the agent's objectives and actions are closely monitored, as well as aligned with firm investors' desires, encompass and relate to the encouragement of longer term firm economic performance. This also includes increasing shareholder voting power, and the implementation of legislative tools and financial reporting standards as means of determining how effectively executives and management are to be compensated. Finally, this book is also aimed at exploring how these safeguards could be applied, particularly within the context of insider trading and the rationale behind several jurisdictions to adopt or not adopt insider trading regulations. The author seeks to provide the readers with a better understanding of how corporate governance structures can assist businesses.

Designing Optimal Models of Financial Regulation in a Changing Financial Environment

Designing Optimal Models of Financial Regulation in a Changing Financial Environment

Author: Marianne Ojo

Publisher: Nova Science Publishers

Published: 2016-06-01

Total Pages:

ISBN-13: 9781634848435

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Preface -- Introduction and background to the study -- Review of the literature on self governance and corporate social responsibility -- Restoring trust in business following corporate collapses like ENRON : Sarbanes Oxley Act and principles based accounting -- Responsive regulation and corporate social responsibility : achieving right balance between persuasion and penalization -- Building on the trust of management : restoring trust in businesses through corporate governance -- Regulating stock markets and financial services : a matter of regulatory style and structure? -- Role of monetary policy in matters relating to financial stability : central banks and different policies implemented in response to the recent financial crisis -- Central bank's role and involvement in bank regulation : lender of last resort arrangements and the special resolution regime (SRR) -- The financial services authority : a model of improved accountability? -- Sarbanes Oxley, non audit services (NAS) and the mandatory rotation of audit firms -- Proposals for a new audit liability regime in Europe -- Audits, audit quality and signalling mechanisms : addressing information asymmetries in concentrated and family ownership systems/structures -- Credit risk measurement, leverage ratios and Basel III : proposed Basel III leverage and supplementary leverage ratios -- The unintended consequences and challenges of the Basel III leverage ratio : supplementary leverage ratios -- Designing regulatory policies aimed at effectively implementing mandatory audit rotation -- Conclusion and further recommendations -- References -- Index


Book Synopsis Designing Optimal Models of Financial Regulation in a Changing Financial Environment by : Marianne Ojo

Download or read book Designing Optimal Models of Financial Regulation in a Changing Financial Environment written by Marianne Ojo and published by Nova Science Publishers. This book was released on 2016-06-01 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Preface -- Introduction and background to the study -- Review of the literature on self governance and corporate social responsibility -- Restoring trust in business following corporate collapses like ENRON : Sarbanes Oxley Act and principles based accounting -- Responsive regulation and corporate social responsibility : achieving right balance between persuasion and penalization -- Building on the trust of management : restoring trust in businesses through corporate governance -- Regulating stock markets and financial services : a matter of regulatory style and structure? -- Role of monetary policy in matters relating to financial stability : central banks and different policies implemented in response to the recent financial crisis -- Central bank's role and involvement in bank regulation : lender of last resort arrangements and the special resolution regime (SRR) -- The financial services authority : a model of improved accountability? -- Sarbanes Oxley, non audit services (NAS) and the mandatory rotation of audit firms -- Proposals for a new audit liability regime in Europe -- Audits, audit quality and signalling mechanisms : addressing information asymmetries in concentrated and family ownership systems/structures -- Credit risk measurement, leverage ratios and Basel III : proposed Basel III leverage and supplementary leverage ratios -- The unintended consequences and challenges of the Basel III leverage ratio : supplementary leverage ratios -- Designing regulatory policies aimed at effectively implementing mandatory audit rotation -- Conclusion and further recommendations -- References -- Index

Designing Optimal Models of Financial Regulation in a Changing Financial Environment (II).

Designing Optimal Models of Financial Regulation in a Changing Financial Environment (II).

Author: Marianne Ojo D Delaney PhD

Publisher:

Published: 2016

Total Pages: 3

ISBN-13:

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Consolidating on a choice selection of chapters from its predecessor volume, “Designing Optimal Models of Financial Regulation in a Changing Financial Environment” - as well as conference presentations and recent global developments, this volume specifically addresses and recommends optimal models of financial regulation - not only in the post crisis financial and regulatory environment in Europe, but also with respect to the regulatory environment and corporate governance structures in China, India, Japan, the United States of America - to name a few of the selected jurisdictions. It also considers the future of financial services in the European Union - following the pre-crisis revolution and financial developments which were heralded by many Scandinavian countries in adopting a model of unified services supervision.Developments which have prompted a move by some jurisdictions from the pre-crisis unified model of financial supervision to twin peak models of financial supervision are also considered in this respect. In highlighting and accounting for why certain jurisdictions had to adopt a move from the unified model of financial supervision to twin peak models of financial supervision, this volume not only recommends optimal models for the future and evolving financial environment, but also considers the role which jurisdictions such as South Africa, Malaysia and Australia are playing in the current financial environment.The role of emerging economies is also considered in light of current global economic developments. As highlighted in the prelude to the first volume, which consolidates on the 2015 Tulane Law Symposium, “The Promise and Perils of Convergence in Financial Regulation and Consumer Protection”.- Given the present volatile financial environment, investors have every right to be concerned with global developments which are contributing to turmoil in financial markets - global developments such as the slowdown in China's economy, the slump in oil prices, as well as a lack of consensus among major leading economies in respect of monetary policy decisions such as inflation targeting.


Book Synopsis Designing Optimal Models of Financial Regulation in a Changing Financial Environment (II). by : Marianne Ojo D Delaney PhD

Download or read book Designing Optimal Models of Financial Regulation in a Changing Financial Environment (II). written by Marianne Ojo D Delaney PhD and published by . This book was released on 2016 with total page 3 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consolidating on a choice selection of chapters from its predecessor volume, “Designing Optimal Models of Financial Regulation in a Changing Financial Environment” - as well as conference presentations and recent global developments, this volume specifically addresses and recommends optimal models of financial regulation - not only in the post crisis financial and regulatory environment in Europe, but also with respect to the regulatory environment and corporate governance structures in China, India, Japan, the United States of America - to name a few of the selected jurisdictions. It also considers the future of financial services in the European Union - following the pre-crisis revolution and financial developments which were heralded by many Scandinavian countries in adopting a model of unified services supervision.Developments which have prompted a move by some jurisdictions from the pre-crisis unified model of financial supervision to twin peak models of financial supervision are also considered in this respect. In highlighting and accounting for why certain jurisdictions had to adopt a move from the unified model of financial supervision to twin peak models of financial supervision, this volume not only recommends optimal models for the future and evolving financial environment, but also considers the role which jurisdictions such as South Africa, Malaysia and Australia are playing in the current financial environment.The role of emerging economies is also considered in light of current global economic developments. As highlighted in the prelude to the first volume, which consolidates on the 2015 Tulane Law Symposium, “The Promise and Perils of Convergence in Financial Regulation and Consumer Protection”.- Given the present volatile financial environment, investors have every right to be concerned with global developments which are contributing to turmoil in financial markets - global developments such as the slowdown in China's economy, the slump in oil prices, as well as a lack of consensus among major leading economies in respect of monetary policy decisions such as inflation targeting.

Symposium

Symposium

Author: Marianne Ojo D Delaney PhD

Publisher:

Published: 2016

Total Pages: 1

ISBN-13:

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Consolidating on the Symposium “The Promise and Perils of Convergence in Financial Regulation and Consumer Protection”......................, this volume focuses exclusively on the structure of financial regulation - as well as the system of financial supervision - in incorporating the role of external auditors through on site and off site supervision.As well as contributing to the literature on whether regulatory convergence should be encouraged in matters relating to consumer finance and investment products, this volume is aimed at highlighting how initiatives and regulatory objectives of regulators within the banking, insurance and investment industries can be consolidated upon. This is extensively illustrated by way of reference to effective compliance, monitoring and enforcement procedures and ultimately through regulatory models such as the Enforced Self-Regulation model and the Co-operative and Competitive Enforced Self-Regulation models.Further, the volume effectively demonstrates that the structure of financial regulation is not only crucial to the success of the attainment of regulatory objectives, but also the extent of involvement, coordination, and cooperation between involved supervisory authorities. In addition, the allocation of appropriate tools and resources to those authorities who are best endowed, equipped with the expertise to carry out the required level of monitoring and supervision, as well as clear allocation of such responsibilities, would ensure resources of time, expertise are not wasted and that responsibilities are not duplicated.


Book Synopsis Symposium by : Marianne Ojo D Delaney PhD

Download or read book Symposium written by Marianne Ojo D Delaney PhD and published by . This book was released on 2016 with total page 1 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consolidating on the Symposium “The Promise and Perils of Convergence in Financial Regulation and Consumer Protection”......................, this volume focuses exclusively on the structure of financial regulation - as well as the system of financial supervision - in incorporating the role of external auditors through on site and off site supervision.As well as contributing to the literature on whether regulatory convergence should be encouraged in matters relating to consumer finance and investment products, this volume is aimed at highlighting how initiatives and regulatory objectives of regulators within the banking, insurance and investment industries can be consolidated upon. This is extensively illustrated by way of reference to effective compliance, monitoring and enforcement procedures and ultimately through regulatory models such as the Enforced Self-Regulation model and the Co-operative and Competitive Enforced Self-Regulation models.Further, the volume effectively demonstrates that the structure of financial regulation is not only crucial to the success of the attainment of regulatory objectives, but also the extent of involvement, coordination, and cooperation between involved supervisory authorities. In addition, the allocation of appropriate tools and resources to those authorities who are best endowed, equipped with the expertise to carry out the required level of monitoring and supervision, as well as clear allocation of such responsibilities, would ensure resources of time, expertise are not wasted and that responsibilities are not duplicated.

Aligning Financial Supervisory Structures with Country Needs

Aligning Financial Supervisory Structures with Country Needs

Author: Jeffrey Carmichael

Publisher: World Bank Publications

Published: 2004

Total Pages: 290

ISBN-13: 9780821360026

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This publication contains the proceedings of an international conference on the regulation of financial institutions and supervisory structural reforms, held in Washington D.C., United States in December 2003 and involving participants from 52 countries. It considers case studies of experiences of regulatory reform approaches adopted in a number of countries including Australia, South Africa, Ireland, Sweden, Hungary and Estonia.


Book Synopsis Aligning Financial Supervisory Structures with Country Needs by : Jeffrey Carmichael

Download or read book Aligning Financial Supervisory Structures with Country Needs written by Jeffrey Carmichael and published by World Bank Publications. This book was released on 2004 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: This publication contains the proceedings of an international conference on the regulation of financial institutions and supervisory structural reforms, held in Washington D.C., United States in December 2003 and involving participants from 52 countries. It considers case studies of experiences of regulatory reform approaches adopted in a number of countries including Australia, South Africa, Ireland, Sweden, Hungary and Estonia.

Financial Regulation at the Crossroads

Financial Regulation at the Crossroads

Author: Panagiotis Delimatsis

Publisher: Kluwer Law International B.V.

Published: 2011-01-01

Total Pages: 426

ISBN-13: 9041133550

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This book brings outstanding expertise and provides insightful perspectives from nineteen authors with diverse backgrounds, including officials from international organizations, national regulators, and commercial banking, as well as academics in law, economics, political economy, and finance. The authors not only shed light on the causes of the financial turmoil, but also present thoughtful proposals that contribute to the future policy debate, and discuss opportunities that financial services can offer in funding activities which raise standards of living through initiatives in microfinance, renewable energy, and food distribution. The contributions to this volume tackle several of the thorniest issues of financial regulation in a post-crisis environment, such as: the mechanics of contagion within the financial system and the role of liquidity; moral hazard when large financial institutions are no longer subject to the disciplinary effects of bankruptcy; bank capital requirements; management compensation; design of bank resolution schemes; a function-centric versus institution-centric regulatory approach; subsidization and compatibility of stimulus packages with EU rules on state aid; trade finance and the role of the GATS prudential carve-out; and the role of financial services in promoting human rights or combating climate change.


Book Synopsis Financial Regulation at the Crossroads by : Panagiotis Delimatsis

Download or read book Financial Regulation at the Crossroads written by Panagiotis Delimatsis and published by Kluwer Law International B.V.. This book was released on 2011-01-01 with total page 426 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book brings outstanding expertise and provides insightful perspectives from nineteen authors with diverse backgrounds, including officials from international organizations, national regulators, and commercial banking, as well as academics in law, economics, political economy, and finance. The authors not only shed light on the causes of the financial turmoil, but also present thoughtful proposals that contribute to the future policy debate, and discuss opportunities that financial services can offer in funding activities which raise standards of living through initiatives in microfinance, renewable energy, and food distribution. The contributions to this volume tackle several of the thorniest issues of financial regulation in a post-crisis environment, such as: the mechanics of contagion within the financial system and the role of liquidity; moral hazard when large financial institutions are no longer subject to the disciplinary effects of bankruptcy; bank capital requirements; management compensation; design of bank resolution schemes; a function-centric versus institution-centric regulatory approach; subsidization and compatibility of stimulus packages with EU rules on state aid; trade finance and the role of the GATS prudential carve-out; and the role of financial services in promoting human rights or combating climate change.

The Fundamental Principles of Financial Regulation

The Fundamental Principles of Financial Regulation

Author: Charles Albert Eric Goodhart

Publisher: Centre for Economic Policy Research

Published: 2009

Total Pages: 144

ISBN-13:

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Analytical background -- Nature of systemic risk -- Who should be regulated (by whom) -- Counter-cyclical regulation -- Regulation of liquidity and maturity mismatches -- Other regulatory issues -- The structure of regulation -- Conclusions -- Appendix : the boundary problem in financial regulation -- Discussion and roundtables.


Book Synopsis The Fundamental Principles of Financial Regulation by : Charles Albert Eric Goodhart

Download or read book The Fundamental Principles of Financial Regulation written by Charles Albert Eric Goodhart and published by Centre for Economic Policy Research. This book was released on 2009 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analytical background -- Nature of systemic risk -- Who should be regulated (by whom) -- Counter-cyclical regulation -- Regulation of liquidity and maturity mismatches -- Other regulatory issues -- The structure of regulation -- Conclusions -- Appendix : the boundary problem in financial regulation -- Discussion and roundtables.

Primer on Designing Optimal Regulation

Primer on Designing Optimal Regulation

Author: Beni Chugh

Publisher:

Published: 2020

Total Pages: 6

ISBN-13:

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Technology is changing users' experience of finance. The latest wave of financial technology goes beyond innovations in the delivery of financial services. It is expanding the choice set of financial services available to users and the ways in which they choose and consume from it.Several mechanisms enabled by technology are mediating these changes including the (i) disintermediation of traditional financial services; and (ii) the convergence of processes, platforms and financial infrastructure, bringing together services and products that were previously offered independently. Simultaneously, the increased availability and use of personal information in offering providers the opportunity to personalise financial products and services suitable for each consumer.As consumers begin transacting in this new environment, new considerations arise for the financial system and the existing regulatory rubric. The need arises to re-visit the regulatory posture assumed in a more analogue, less data-driven financial landscape on issues of micro-prudential risk, conduct regulation, consumer protection and systemic risk.Foundational questions that arise include where the regulatory perimeter should lie with respect to new non-financial sector entities in the chain of financial services provision, and how the tension between institution-based regulation and function-based regulation might be resolved in India. The robustness of existing frameworks for risk assessment, consumer protection, apportioning liability and the use of client data need to be reassessed in this new landscape. Designing the optimal regulation for data-driven finance will require the creation of a new, shared understanding of risks that emerge in this changing financial landscape, calibrating appropriate regulatory responses and new methods of coordination across regulators within and outside the financial sector.


Book Synopsis Primer on Designing Optimal Regulation by : Beni Chugh

Download or read book Primer on Designing Optimal Regulation written by Beni Chugh and published by . This book was released on 2020 with total page 6 pages. Available in PDF, EPUB and Kindle. Book excerpt: Technology is changing users' experience of finance. The latest wave of financial technology goes beyond innovations in the delivery of financial services. It is expanding the choice set of financial services available to users and the ways in which they choose and consume from it.Several mechanisms enabled by technology are mediating these changes including the (i) disintermediation of traditional financial services; and (ii) the convergence of processes, platforms and financial infrastructure, bringing together services and products that were previously offered independently. Simultaneously, the increased availability and use of personal information in offering providers the opportunity to personalise financial products and services suitable for each consumer.As consumers begin transacting in this new environment, new considerations arise for the financial system and the existing regulatory rubric. The need arises to re-visit the regulatory posture assumed in a more analogue, less data-driven financial landscape on issues of micro-prudential risk, conduct regulation, consumer protection and systemic risk.Foundational questions that arise include where the regulatory perimeter should lie with respect to new non-financial sector entities in the chain of financial services provision, and how the tension between institution-based regulation and function-based regulation might be resolved in India. The robustness of existing frameworks for risk assessment, consumer protection, apportioning liability and the use of client data need to be reassessed in this new landscape. Designing the optimal regulation for data-driven finance will require the creation of a new, shared understanding of risks that emerge in this changing financial landscape, calibrating appropriate regulatory responses and new methods of coordination across regulators within and outside the financial sector.

Estimating the Costs of Financial Regulation

Estimating the Costs of Financial Regulation

Author: Mr.Andre Santos

Publisher: International Monetary Fund

Published: 2012-09-11

Total Pages: 43

ISBN-13: 147551008X

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Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.


Book Synopsis Estimating the Costs of Financial Regulation by : Mr.Andre Santos

Download or read book Estimating the Costs of Financial Regulation written by Mr.Andre Santos and published by International Monetary Fund. This book was released on 2012-09-11 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.

Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance

Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance

Author: El Bachir Boukherouaa

Publisher: International Monetary Fund

Published: 2021-10-22

Total Pages: 35

ISBN-13: 1589063953

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This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.


Book Synopsis Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance by : El Bachir Boukherouaa

Download or read book Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance written by El Bachir Boukherouaa and published by International Monetary Fund. This book was released on 2021-10-22 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.