Systemic Regulators’ Accountability to Parliaments : Advantages for Stability of Global Financial Markets

This response to the 2009 UK White Paper on ‘Reforming Financial Markets' argues for stronger democratic oversight of regulators and for regulatory diversity in order to reduce ‘market herding' and the consequent systemic risks. In the context of hitherto weak democratic accountability and political challenges, international networking of regulators and those they regulate has resulted in convergence of regulatory thinking and standards - creating groupthink, common ‘blind spots' and systemic vulnerability. The antidote, regulatory diversity, would correspond to the strategy of re-politicisation of financial market regulation, and democratic steering of regulatory agencies, displacing the currently dominant notion of financial market regulation as a purely technical, expert, ‘insider' discourse. If it is too much of a paradox for policy-makers and market participants that international cooperation in pursuit of global stability must include making space for some regulatory diversity, then we may expect re-plays of recent stressful events