American Financial Regulatory Reform and its Implications for Financial Stability

The global financial crisis,originated in the sub-prime mortgage problem,demonstrates the failure of American financial regulatory system and the necessity to strengthen the regulatory reform. The American financial regulatory mechanism has become a model as double layers and multiple regulatory authorities and promoted the financial markets in America to a high prosperity. However,the global financial crisis shows that the regulatory system,lack of an integrated regulator,or a super regulator,could not prevent a systemic crisis. Meanwhile,there have many failures in the regulatory system that leads to a low effectiveness. After the crisis,the American government has recognized the importance to enhance regulatory effectiveness and has conducted a significant reform to reduce the deviation among the mechanism of financial markets,the financial business models and the financial regulatory system. The new framework would be helpful to improve the efficiency and effectiveness of the regulatory system and enhance the financial stability,while the reform plan does not deracinate the roots of financial crisis and might generate some new financial risks.