The supervisory implications of financial globalization: Three views

"Clearly the financial system has been undergoing dramatic and far reaching changes in the decade of the 1980s. And equally clearly, the supervisory and regulatory framework must adapt to this rapidly changing environment... Some major evolutionary trends have emerged in the 1980s that appear to me to be irreversible and to carry important supervisory implications. First, geographic barriers to competition have been falling, both in the U.S. and abroad. Among the more noteworthy developments are the growth in interstate banking in the U.S., the prospect of dramatic reductions in barriers to financial services competition within the European Community as 1992 approaches, and the strategic positioning of banking and securities firms in key global markets. These changes will inevitably result in an expansion in the geographic scope of the lead supervisor's responsibility, and call for much closer coordination among supervisors in different jurisdictions. Implicit in such coordination is the need to develop mechanisms for the broad exchange of supervisory information among different authorities.