Co-ordination problems can lead to “financial instabilities such as booms, bank runs, asset fire sales, credit crunches and (market and funding) liquidity problems”, all of which are still etched in our memories from experiences a decade ago12. At its core, financial regulation is about supporting positive outcomes and, ultimately, the economic well-being of the community as a whole.
Such outcomes may be reasonably intuitive to describe but fundamentally they involve a stable financial system, trust and confidence in financial markets, and ensuring fair treatment of consumers. Regulating financial markets After indulging me in some philosophy and some economics, allow me a moment on the law.