The Importance of Financial Regulation

10/11/2003 Marcus Killick OBE

In this article, Marcus Killick underscores the importance of financial regulation in maintaining trust and stability in the financial system. It highlights that trust is fundamental to financial transactions and that regulation plays a crucial role in replacing personal trust with reliance on regulatory bodies. Regulation ensures that financial firms adhere to standards, disclose risks to consumers, and provide an economy of scale in monitoring. He stresses that without regulation, consumers face limited information and opportunities for assessing the safety and quality of financial services, which can discourage saving and investment.

However, Killick acknowledges that regulation is not a guarantee and that it must strike a balance between reducing risk and not stifling legitimate business. He concludes by proposing that effective regulation requires a partnership between regulators, consumers, and the financial sector, with each party playing a role in maintaining trust and preventing financial crime.

Read the article: Regulation – Why Bother?

(Article first published in The Gibraltar Magazine, 2003.)

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