[1] See, for example, the bulk of the literature reviewed in the following papers: K.K. Mwenda and A. Fleming, "International Developments in the Organizational Structure of Financial Services Supervision: Part 1," Journal of International Banking Law, Vol. 16, No. 12, 2001; K.K. Mwenda and A Fleming, "International Developments in the Organizational Structure of Financial Services Supervision: Part 11," Journal of International Banking Law, Vol. 17, No.1, 2002; and, K.K. Mwenda, "Integrated Financial Services Supervision in Poland, the UK and the Nordic countries," Tilburg Foreign Law Review, Vol. 10, No.2, 2002.
[2] See generally C. Briault, "The Rationale for a Single National Financial Services Regulator," Occasional Paper Series No. 2, (London: Financial Services Authority, May 1999). In another paper, Briault (see generally C. Briault, "A Single Regulator for the UK Financial Services Industry," Financial Stability Review, (November 1998)), observes that the benefits of a unified regulator include the harmonization, consolidation and rationalization of the principles, rules and guidance issued by the existing regulators or embedded within existing legislation, while recognizing that what is appropriate for one type of business, market or customer may not be appropriate for another; a single process for the authorization of firms and for the approval of some of their employees, using standard processes and a single database; a more consistent and coherent approach to risk-based supervision across the financial services industry, enabling supervisory resources and the burdens placed on regulated firms to be allocated more effectively and efficiently on the basis of the risks facing consumers of financial services; a more consistent and coherent approach to enforcement and discipline, while recognizing the need for appropriate differentiation; and, in addition to a single regulator, single schemes for handling consumer complaints and compensation, and a single independent appeals tribunal. Further readings, see also M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, Policy Research Working Paper 2223, (Washington DC: The World Bank, 1999), p. 11.
[3] See generally K.K. Mwenda, "Integrated Financial Services Supervision in Poland, the UK and the Nordic countries," Tilburg Foreign Law Review, op cit.
[4] M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 2, argue that: "An important issue in deciding to adopt a unified supervisory agency is to consider whether it should be concerned exclusively with prudential (i.e. safety and soundness) regulation, or whether it should also have responsibility for conduct of business... it should be noted only the United Kingdom, of the countries surveyed, has created a unified regulator with both prudential and conduct of business responsibilities." Cf. C.A.E Goodhart, P. Hartman, D.T. Llewellyn, L. Rojas-Suarez, S. Weisbrod, Financial Regulation, (London and New York: Routledge, 1998); M. Taylor, Twin Peaks: A Regulatory Structure for the New Century, (London: Centre for the Study of Financial Innovation, December 1995); M. Taylor, Peak Practice: How To Reform the United Kingdom's Regulatory System, (London: Centre for the Study of Financial Innovation, October 1996); C.A.E. Goodhart, "The Costs of Regulation," in A. Sheldon (ed.), Financial Regulation or Over-regulation, (London: Institute of Economic Affairs, 1988); and C. Briault, "The Rationale for a Single National Financial Services Regulator," Occasional Paper Series No. 2, (London: Financial Services Authority, May 1999).
[5] Addressing some of the recent developments in bank regulation, Llewellyn draws an analogy and argues (D.T. Llewellyn, "Some lessons for bank regulation from recent cases," a paper presented at the conference on Regulation and Stability in the Banking Sector, at De Nederlandsche Bank, Amsterdam, 3-5 Nov. 1999, abstract page): "The causes of systemic bank distress are complex and multi-dimensional involving economic, financial, regulatory and structural weaknesses. This also means that regulatory approaches also need to be multi-dimensional... an optimum 'regulatory regime' needs to incorporate seven key components: regulation (the rules imposed by official agencies), official supervision, incentive structures within banks, market discipline, intervention arrangements in the event of distress, corporate governance arrangements with banks, and the accountability of regulatory agencies. All are necessary but none alone are sufficient for systemic stability. As there are trade-offs between the components, regulatory strategy needs to focus on the overall impact of the regime rather than only the regulation component."
[6] See K.K. Mwenda and A. Fleming, "International Developments in the Organizational Structure of Financial Services Supervision: Part 1," Journal of International Banking Law, op. cit.; and, K.K. Mwenda and A Fleming, "International Developments in the Organizational Structure of Financial Services Supervision: Part 11," Journal of International Banking Law, op. cit. See also K.K. Mwenda, "Integrated Financial Services Supervision in Poland, the UK and the Nordic countries," Tilburg Foreign Law Review, op cit.
[7] See IMF, The Republic of Latvia: Financial System Stability Assessment, Including Reports on Observance of Standards and Codes on the following topics: Banking Supervision; Payments Systems; Securities Regulation; Insurance Regulation; Corporate Governance; and Monetary and Financial Policy Transparency, IMF Country Report No. 02/67, (Washington DC: IMF, 2002), available Online at the IMF external web-site: http://www.imf.org/external/pubs/ft/scr/2002/cr0267.pdf, visited on March 31st 2003.
[8] See IMF, Ibid., p. 11.
[9] See IMF, Ibid., p. 11.
[10] See IMF, Ibid., p. 11.
[11] See IMF, Ibid., p. 11.
[12] See IMF, Ibid., p. 11.
[13] See IMF, Ibid., p. 11.
[14] See IMF, Ibid., p. 4.
[15] See IMF, Ibid., p. 4.
[16] See IMF, Ibid., p. 4.
[17] See IMF, Ibid., p. 4.
[18] See IMF, Ibid., p. 20
[19] See IMF, Ibid., p. 17.
[20] See IMF, Ibid., p. 17.
[21] See IMF, Ibid., p. 17.
[22] See IMF, Ibid., p. 17.
[23] See IMF, Ibid., p. 17.
[24] Five companies undertake the bulk of leasing, three of which are subsidiaries of Latvian banks. Their assets are deduced from banks' assets (first row of the table). In addition, four banks undertake leasing activities in the order of LVL (Latvian currency) 85 million directly.
[25] IMF, The Republic of Latvia: Financial System Stability Assessment, Including Reports on Observance of Standards and Codes on the following topics: Banking Supervision; Payments Systems; Securities Regulation; Insurance Regulation; Corporate Governance; and Monetary and Financial Policy Transparency, op. cit., p. 8.
[26] IMF, Ibid., p. 8.
[27] IMF, Ibid., p. 8.
[28] However, the shallow domestic Lats market is compensated by the ability of banks in Latvia to access the Bank of Latvia's lending facilities. While the inter-bank market is the primary means of satisfying day-to-day liquidity needs, the Bank of Latvia provides additional liquidity support.
[29] See IMF, The Republic of Latvia: Financial System Stability Assessment, Including Reports on Observance of Standards and Codes on the following topics: Banking Supervision; Payments Systems; Securities Regulation; Insurance Regulation; Corporate Governance; and Monetary and Financial Policy Transparency, op. cit., p. 9.
[30] IMF, Ibid., p. 9.
[31] IMF, Ibid., p. 9.
[32] See Bank of Latvia, "On Establishing the Financial and Capital Market Commission in Latvia," Press Release of May 22, 2001, available Online at: http://www.bank.lv/eng/main/sapinfo/lbpdip/index.php?30816&PHPSESSID=4560d09b0de5f4b291ea190bbc69477a, visited on February 18th 2003.
[33] See Bank of Latvia, "On Establishing the Financial and Capital Market Commission in Latvia," Press Release of May 22, 2001, Ibid.
[34] See IMF, The Republic of Latvia: Financial System Stability Assessment, Including Reports on Observance of Standards and Codes on the following topics: Banking Supervision; Payments Systems; Securities Regulation; Insurance Regulation; Corporate Governance; and Monetary and Financial Policy Transparency, op. cit., p. 19.
[35] A. Vanags, "Latvia's New Super-Regulators Have a Mission," Transition Newsletter, at the following web-site: http://www.worldbank.org/transitionnewsletter/octnovdec01/pgs35-36.htm, visited on February 18th, 2003.
[36] See Ibid.
[37] The Law on the Financial and Capital Market Commission 2000, art. 6.
[38] Ibid., art. 6.
[39] Ibid., art. 7(1).
[40] Ibid., art. 7(2).
[41] The Law on the Financial and Capital Market Commission 2000, art. 8.
[42] Ibid., art. 10(3).
[43] In other countries, such as the United Kingdom and Hungary, the sharing of information between the unified regulator and other stakeholders in the financial system (e.g. the central bank) is facilitated by a Memorandum of Understanding. Generally, a Memorandum of Understanding, unlike a piece of legislation, can be likened to what some jurisprudents call 'soft law'.
[44] The Law on the Financial and Capital Market Commission 2000, art. 10(1).
[45] Ibid., art. 10(2).
[46] Ibid., art. 10(2).
[47] The Law on the Financial and Capital Market Commission 2000, art. 13(1),(2). This 2000 law repealed the Latvian Law on Securities Market Commission (Zinotajs of the Parliament of the Republic of Latvia and the Cabinet of Ministers, 1995, No. 20; 1997, No. 14; 1998, No. 23).
[48] The Law on the Financial and Capital Market Commission 2000, art. 13(2).
[49] Ibid., art. 18(3).
[50] Ibid., art. 13(3).
[51] Ibid., art. 13(4).
[52] Ibid., art. 13(5).
[53] Ibid., art. 13(5).
[54] Ibid., art. 13(6).
[55] Ibid., art. 14.
[56] Ibid., art. 18(2).
[57] The Law on the Financial and Capital Market Commission 2000, art. 15(1).
[58] Ibid., art. 15(2).
[59] Ibid., art. 15(2).
[60] Ibid., art. 15(3).
[61] Ibid., art. 15(4).
[62] Ibid., art. 16(1).
[63] Ibid., art. 16(2).
[64] Ibid., art. 16(2).
[65] Ibid., art. 16(3).
[66] Ibid., art. 16(4).
[67] Ibid., art. 17.
[68] The Law on the Financial and Capital Market Commission 2000, art. 17.
[69] Ibid., art. 21(1).
[70] Ibid., art. 21.
[71] Ibid., art. 21.
[72] Ibid., art. 21.
[73] Ibid., art. 21(1).
[74] Ibid., art. 21(1).
[75] See also Financial and Capital Market Commission, at the following web-site: http://www.latvianbanks.com/banks/Financial_and_Capital_Market_Commission.htm, visited on February 18th, 2003.
[76] See Ibid.
[77] See Ibid.
[78] Ibid.
[79] Ibid.
[80] See Ibid. See also article 5 of the Law on the Financial and Capital Market Commission 2000.
[81] A. Vanags, "Latvia's New Super-Regulators Have a Mission," Transition Newsletter, at the following web-site: http://www.worldbank.org/transitionnewsletter/octnovdec01/pgs35-36.htm, visited on February 18th, 2003.
[82] See Ibid. See also article 9 of the Law on the Financial and Capital Market Commission 2000.
[83] Financial and Capital Market Commission, at the following web-site: http://www.latvianbanks.com/banks/Financial_and_Capital_Market_Commission.htm, visited on February 18th, 2003.
[84] Ibid.
[85] Ibid.
[86] The Law on the Financial and Capital Market Commission 2000, art. 2(1).
[87] Ibid., art. 27.
[88] Ibid., art 2(1).
[89] Ibid., art. 2(2).
[90] Ibid., art. 2(2).
[91] Ibid., art. 3(2).
[92] Ibid., art. 22(1).
[93] K.K. Mwenda, Banking Supervision and Systemic Bank Restructuring, (London: Cavendish Publishing, 2000), p. 113.
[94] Ibid., p. 113.
[95] An integrated model represents a significant concentration of power, ensuring that its powers are not used to serve political rather than administrative purposes.
[96] M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., pp. 4-5.
[97] The only organised financial market in Norway.
[98] M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 5.
[99] Ibid., p. 5.
[100] Ibid., p. 5.
[101] See Ibid., p. 5.
[102] Ibid., p. 5.
[103] Norway's Financial Supervision Act 1956, sec. 2.
[104] Ibid., sec. 2.
[105] Ibid., sec. 2.
[106] Ibid., sec. 2.
[107] Ibid., sec. 2.
[108] Ibid., sec. 2.
[109] Ibid., sec. 2.
[110] Ibid., sec. 2.
[111] Ibid., sec. 2.
[112] M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 7.
[113] Finansinspektionen (the Norwegian unified regulator), FI in Brief, available Online at: http://www.fi.se/english/index.asp, visited on March 31st 2003.
[114] See Ibid.
[115] See Ibid.
[116] See Ibid.
[117] See Ibid.
[118] See Ibid.
[119] M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 6.
[120] This statute contains provisions implementing Council Directive No. 86/635/EEC, Official Journal of the European Communities No. L 372, page 1, (annual accounts and consolidated accounts for mortgage credit institutions), Council Directive No. 90/618/EEC, Official Journal of the European Communities No. L 330, page 44, (amendment of the 1st and 2nd non-life insurance directives), Council Directive No. 90/619/EEC, Official Journal of the European Communities No. L 330, page 50, (2nd non-life insurance directive), Council Directive No. 91/674/EEC, Official Journal of the European Communities No. L 374, page 7, (annual accounts and groups accounts for insurance companies), Council Directive No. 92/49/EEC, Official Journal of the European Communities No. L 228, page 1, (3rd non-life insurance directive), Council Directive No. 92/96/EEC, Official Journal of the European Communities No. L 360, page 1, (3rd life insurance directive), Council Directive No. 93/22/EEC, Official Journal of the European Communities No. L 141, page 27, (investment services directive), Council Directive No. 95/26/EU, Official Journal of the European Communities No. L 168, page 7, (BCCI directive), European Parliament and Council Directive No. 98/78/EU, Official Journal of the European Communities No. L 330, page 1, (insurance group directive), European Parliament and Council Directive No. 2000/12/EU, Official Journal of the European Communities No. L 126, page 1, (credit institution directive), and European Parliament and Council Directive No. 2000/64/EU, Official Journal of the European Communities No. L 290, page 27, (exchange of information).
[121] See M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 6.
[122] See M. Taylor and A. Fleming, Ibid., p. 6.
[123] See M. Taylor and A. Fleming, Ibid., p. 6. On relevant Danish legislation, see for example: the Consolidated Insurance Mediation Act, 2001; the Consolidated Insurance Business Act, 2002; the Investment Companies Consolidated Act, 2000; the Commercial Banks and Savings Banks, etc. Consolidated Act, 2001; the Mortgage Credit Act, 2001; the Danish Supervision of Company Pension Funds Act, 1999; and, the Consolidated Act on Measures to Prevent Money Laundering and Financing of Terrorism, 2002.
[124] See M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 6.
[125] Ibid., p. 7. See also generally B. Drees and C. Pazarbasioglu, The Nordic Banking Crisis: Pitfalls in Financial Liberalisation ?, Occasional Paper 161, (Washington DC: IMF, April 1998), where it is argued that although the banking crises in Norway, Sweden and Finland in the early 1990's followed a similar pattern, and appear to have had similar causes, their impact on the structure of regulation differed significantly between Norway and Sweden, on the one hand, and Finland, on the other.
[126] See M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 7.
[127] See Ibid., p. 7.
[128] See Ibid., p. 7.
[129] Ibid., p. 8.
[130] Financial Supervision Authority Act, 1993, of Finland, sec. 1.
[131] See Ibid., sec. 4(6).
[132] See M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., p. 8.
[133] Financial Supervision Authority Act, 1993, of Finland, sec. 8.
[134] See Ibid., sec. 5.
[135] See M. Taylor and A. Fleming, Integrated Financial Supervision: Lessons from Northern European Experience, op. cit., pp. 9, 17.
[136] See Bank of England Act 1998, sec. 21. It is important to delineate clearly the roles of any other supervisory authority so as to avoid potential for conflict of interests. For further readings see C. Lindgren, Authorities' Roles and Organizational Issues in Systemic Bank Restructuring, Working Paper WP/97/92-EA, (Washington DC: IMF, 1997).
[137] Under consideration for repeal.
[138] See C. Ryan, "Transfer of Banking Supervision to the Financial Services Authority," in M. Blair, R. Cranston, C. Ryan and M. Taylor, Blackstone's Guide To The Bank of England Act 1998, (London: Blackstone Press Limited, 1998), p. 39.
[139] M. Blair, "Introduction and Overview," in M. Blair, R. Cranston, C. Ryan and M. Taylor, Blackstone's Guide To The Bank of England Act 1998, Ibid., p. 5.
[140] See M. Blair, "Introduction and Overview," in Ibid., pp. 6-7.
[141] See L. Bartolini, "The Financial Services Authority: Structure, Mandate, and Policy Issues," in H. Samiei, J K. Martijn, Z. Kontolemis, and L. Bartolini, International Monetary Fund: United Kingdom. Selected Issues, (Washington DC: IMF, February 17, 1999), p. 32.
[142] See Ibid., p. 31.
[143] See Ibid., p. 32.
[144] Ibid., p. 27.
[145] See Ibid., p. 27.
[146] See for example, Ibid., p. 27.
[147] See Ibid., p. 27.
[148] See Ibid., p. 28.
[149] L. Bartolini, "The Financial Services Authority: Structure, Mandate, and Policy Issues," in H. Samiei, J K. Martijn, Z. Kontolemis, and L. Bartolini, International Monetary Fund: United Kingdom. Selected Issues, Ibid., p. 28.
[150] The IMF argues that while countries such as Germany, Japan and - recently - Australia have established separate functions of banking supervision and Lendor-of-last-resort (LOLR), the US, Italy and (to some extent) France have opted for a broad central bank role, combining both monetary policy/LOLR and banking supervision. For a detailed discussion, see L. Bartolini, "The Financial Services Authority: Structure, Mandate, and Policy Issues," in H. Samiei, J K. Martijn, Z. Kontolemis, and L. Bartolini, International Monetary Fund: United Kingdom. Selected Issues, Ibid., pp. 36-37.
[151] L. Bartolini, "The Financial Services Authority: Structure, Mandate, and Policy Issues," in H. Samiei, J K. Martijn, Z. Kontolemis, and L. Bartolini, International Monetary Fund: United Kingdom. Selected Issues, Ibid., pp. 36, 41.
[152] See The Financial Ombudsman Service, Our Voluntary Jurisdiction, available Online at: http://www.financial-ombudsman.org.uk/vj.htm, visited on 31st March, 2003.
[153] K. Alexander, "Insider Dealing and Market Abuse: The Financial Services and Markets Act 2000," working paper whose abstract appears Online at: http://ideas.repec.org/p/cbr/cbrwps/wp222.html, visited on March 31st 2003.
[154] For a further reading, see generally K. Alexander, "Insider Dealing and Market Abuse: The Financial Services and Markets Act 2000," Ibid.
[155] L. Bartolini, "The Financial Services Authority: Structure, Mandate, and Policy Issues," in H. Samiei, J K. Martijn, Z. Kontolemis, and L. Bartolini, International Monetary Fund: United Kingdom. Selected Issues, op. cit., p. 29.
[156] Bartolini (see Ibid., p. 26) argues that one of the main innovations the regulatory reform has introduced into UK financial system is the separation of the functions of banking supervision (now undertaken by the Financial Services Authority) from the provision of emergency liquidity (or the Lender-of-last-Resort, for which the Bank of England will continue to be responsible).
[157] L. Bartolini, "The Financial Services Authority: Structure, Mandate, and Policy Issues," in H. Samiei, J K. Martijn, Z. Kontolemis, and L. Bartolini, International Monetary Fund: United Kingdom. Selected Issues, op. cit., p. 33.
[158] Ibid., p. 30.
[159]
Ibid., p. 30.
[160] See Financial Services Authority, New Responsibilities, available Online at the FSA web-site: http://www.fsa.gov.uk/what/new_responsibilities.html, visited on March 31st 2003.