REGULATORY INTERVENTIONS, CENTRAL BANK SUPPORT, AND OFFICIAL OVERSIGHT AND CONTROL OF WHOLESALE INTERNATIONAL FINANCIAL MARKETS

The aim of the article is to answer a question to what extent the recent crises in international financial markets have confirmed the need for formal regulatory intervention and for official central bank support and subsequently, to what extent transactions in wholesale international financial markets should be subject to official oversight and control or if they can be left to internal market devices. The paper begins with an analysis of major financial disruptions in the last 20 to 25 years from which key findings and conclusions are derived. Subsequently, particular forms of market failure are analyzed with regard to the need of oversight and control of international financial transactions. The author concludes that wholesale international financial markets can be mostly governed by internal market devices. Nevertheless, governments and central banks should have suitable tools of oversight and control of financial transactions and regulatory means of intervention at disposal once the stability of international financial system is at risk.