Examples of such phenomena can be found in the domestic behaviour of US banks in the 1980s14 and the expansion of Asian loans by certain Japanese and European banks more recently.15 Given the strong current trend towards financial deregulation in emerging markets, and the likely effects of similar developments in industrial countries (the “Big Bang” in Japan, the effective demise of Glass-Steagall in the United States and the effects on European banks of the introduction of the euro16), regulatory oversight will continue to have an important role to play for the foreseeable future.
Indeed, it is plausible to argue that the combination of these changing circumstances, allied with the spread of Internet and other technologies17(as well as important demographic changes18), could be ushering in an unprecedented period of transformation in modern financial markets. If so, policy-makers will need all the instruments available to them if this process of change is not to prove disruptive.