To deepen the understanding of financial supervision, we must deeply understand the elements of financial supervision. Generally speaking, financial supervision consists of four major elements: financial supervision subjects, financial supervision objects, financial supervision goals and financial supervision means.
(1) Financial regulators
The main body of financial supervision is the government, as well as public institutions authorized by the government, and sometimes non-official non-governmental institutions (such as various industry self-regulatory organizations) that are generally recognized in the industry. In the early days, most of the subjects of financial supervision in various countries were the central banks. In the 1960s and 1970s, the financial supervision subjects showed a tendency of decentralization and diversification, and special institutions were born to supervise commercial banks, securities industries, and insurance industries. In the late 20th century and early 21st century However, the overall trend in the world is that the central bank gradually loses its financial supervision power, and the financial supervision functions are mainly performed by special supervision institutions other than the central bank.
(2) Objects of financial supervision
The objects of financial supervision are generally divided into three categories: banking institutions (mainly commercial banks), non-banking financial institutions, and financial markets. The early supervision objects were concentrated on commercial banks, but with the development of non-bank financial institutions, the main body of supervision strengthened the supervision of non-bank financial institutions. The frequent fluctuations of the financial market and the resulting “market failure” make the task of supervising the financial market and protecting the interests of investors increasingly arduous
3) Objectives of financial supervision
The goals of financial supervision have different levels, and usually have the following three: first, to prevent systemic risks and maintain the security of the financial system; second, to overcome market failures and ensure a fair market environment to protect the interests of investors; finally, to regulate and promote financial Innovation to improve the efficiency of financial operation
(4) Financial supervision means
The means of financial supervision include legal means, administrative means, economic means, technical means, self-discipline means, etc. In many complex financial fields, such as anti-money laundering, advanced information technology has been adopted to strengthen the effectiveness of supervision.
