Financial Services Regulation

Salvatore J. Babones

Financial services occupy a uniquely powerful position in all monetized economies. Firms and individuals engaged in financial services are responsible for allocating a society's resources to the most economically profitable activities. Because judgments of profitability may (and often do) clash with government policy priorities or broad social norms, domestic financial services are highly regulated in almost all jurisdictions. The recent expansion of financial services firms to achieve near-global scale has been accompanied by multilateral efforts to regulate them. In many respects, the financial services industries are at the leading edge of both contemporary processes of globalization and the emerging principles of global governance. Financial services have been regulated as long as there have been formal commercial codes. A section of Hammurabi's Code (c. 1700 BCE) was apparently dedicated to the regulation and documentation of commercial lending (though only a fragment, paragraph 100, has survived). The Laws of Manu (c. 1500 ...

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