•  The facts therefore served as a stark reminder that self-regulation just doesn’t work, primarily because of the imperfections in certain financial markets, which are neither transparent nor efficient (like the CDS market for example) and can generate potentially huge negative externalities. Thus, regulation and supervision were once again elevated to their rightful role after the crisis – a role they should never have lost. By way of an aside, I note that the crisis was triggered in the United States by unregulated entities (conduits) or banks that weren’t applying Basel 2 requirements (investment banks which theoretically were regulated by the SEC). By contrast, French banks for example, where supervision was at times branded “intrusive”, managed on the whole to get through the different phases of the crisis relatively unscathed. ii)  What rules should apply to finance? •  Once a consensus had been reached over the need to reinforce financial regulation and supervision, the next question was naturally: what kind of regulation? •  The principle that guided the regulators, notably on the Basel Committee, was that finance should once again be made useful to the economy: that it should serve the economy rather than govern it.
Christian Noyer: The end of the financial dictatorship? Introduction by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, to Session 5 “The end of the financial dictatorship?”, Aix-en-Provence Economic Forum, Aix-en-Provence, 6 July 2013. * 1. *  *  Firstly, is finance really a dictatorship? This question isn’t new: already Petronius, in Roman times, at the start of our modern era, asked: “What use are laws when money is king?” The question seems rhetorical, and you can sense in its resignation that the Latin writer (who, incidentally, was born in the nearby city of Marseille) was already worried about the difficulties of establishing the primacy of politics over finance. i)  It is true that the world of finance does have considerable powers:  •  The power to create and support economic development. In its most traditional forms, this is finance’s most crucial role – and power: it is an essential cog in the wheel of economic activity, allocating capital, supplying credit and enabling the management of risk. More than just “the sinews of war”, it can be seen as the lifeblood flowing through our veins. •  But also a highly destructive power: it was the unchecked sophistication of finance and the excesses this caused that lay behind the 2007-2008 financial crisis, a crisis that subsequently transformed into an economic, social and political crisis.