Twin Peaks and Financial Regulation : The Challenges of Increasing Regulatory Overlap and Expanding Responsibilities

In recent years there has been a renewed emphasis on improving the regulatory frameworks of financial systems in part as a response to the global financial crisis. This has included a focus on how institutional design can promote financial stability. Support for the continued importance of institutional design in financial stability has often looked to the relatively positive performance during the financial crisis of some countries, including Australia, which have implemented the so-called ‘Twin Peaks' model of financial infrastructure. This has led several countries to consider adopting various forms of the Twin Peaks model. The authors examine how the Twin Peaks model in Australia has responded to financial collapses and challenges since its implementation. They argue that Australia's experience indicates continuing challenges for regulators in coordinating regulatory functions and resolving issues concerning the nature and scope of functions of regulators. The analysis may assist reformers in other countries looking to the Twin Peaks model to address regulatory problems