At all levels - whether it be international, European or national, regulators share their monitoring and regulatory activities between two fields: banking on one hand and financial markets on the other hand.
Historically, central banks play the role of "banks of the banks", being the lender of last resort and the banker of the State. Central banks see to currency stability by adjusting money supply for banks. The adjustment tools are the reserves that banks must deposit to central banks and above all the control of the interest rate of loans provided by the central bank to commercial banks. This monetary policy is often conducted independently of the State - this is the case in the European Union - but not always: the U.S. Federal Reserve operates under the control of the Senate.
All countries are also developing appropriate structures to ensure the smooth functioning of markets in financial instruments. These structures cooperate internationally.
The mission of regulators also includes a significant amount of investigation, of gathering information on the economy and the markets and of reflection, while pursuing a non-profit goal. Therefore, a visit to the sites of these organisations is often very interesting, because they are a mine of free information.
The international agencies
There is no real supervisory authority at the international level, but national authorities meet and consult each other in organisations whose publications are often of great interest and have a real influence on the decisions taken at the local level.
The Bank for International Settlements
The BIS, based in Basel, Switzerland, acts as the "central bank of central banks". It offers a range of services designed to help them manage their foreign exchange and gold reserves.
In addition, the BIS coordinates and hosts several forums and committees promoting international financial stability. The most well known of them, the Basel Committee, has issued the "Basel Agreement", defining the Cooke ratio, which has now become the McDonough ratio.
The BIS does not issue legally enforceable decisions, but the collegial discussions held under its auspices give its proposals a certain weight.
International Organization of Securities Commissions
The IOSCO includes all market authorities around the world. The United States are represented by the SEC (Securities and Exchange Commission), the United Kingdom by the FSA (Financial Services Authority), France by the AMF (Autorité des Marchés Financiers)... The IOSCO promotes the emergence of standards in trade on international markets, cooperation between market authorities in their monitoring activities and joint reflection on the operation and regulation of the markets.
The European authorities
The European Central Bank, the Eurosystem and the ESCB
The European Central Bank (ECB), along with the central banks of each country of the Euro zone, make up the Eurosystem. The ECB and all the central banks of the European Union member countries (including countries which did not adopt the Euro), make up the ESCB (European System of Central Banks).
The main objective of the Eurosystem, as defined by the Maastricht treaty, is to maintain price stability. The governing council of the governors of the Eurosystem central banks collectively defines the monetary policy, which is then implemented locally by each central bank. The ECB enacts regulations about the functioning of the banking and monetary market of the Euro zone.
Committee of European Securities Regulators
The CESR gathers the market authorities of the 25 member states and future members of the European Union (France for instance is represented by the AMF) and a representative of the European Commission. CESR improves coordination between the local regulatory authorities, advises the European Commission for the rulemaking in the field of Stock Exchanges and keeps watch over the enforcement of regulations throughout the European zone
The regulatory authorities in France
The Banque de France
Member of the Eurosystem, the Banque de France (Bank of France) ensures the implementation of the common monetary policy defined by the council of governors of central banks of the eurozone. In concrete terms, the credit institutions wishing to obtain financing from the central bank may participate in tenders which are held weekly under the conditions defined by the Eurosystem. The Bank of France collects statistical information that is needed for the definition of the monetary policy.
The Bank of France organises debt-issuing of the French state on behalf of the "Agence France Trésor" (French Treasury). The Bank of France is responsible for issuing currency (notes and coins). It manages the foreign exchange reserves of France. It establishes the balance of payments on behalf of the State. It centralises a number of useful information to banks: the French Central Credit Register, the FIBEN Companies Database, the register of payment irregularities.
The Bank of France monitors and regulates the banking market. This mission is carried out especially in the various committees operating under its auspices: the Banking and Financial Regulatory Committee (CRBF), the Credit Institutions and Investment Firms Committee (CECEI), the Banking Commission, (now merged with the ACAM, which controlled insurance companies, to form the ACP, Prudential Control Authority), the National Credit and Securities Council (CNCT) and the Advisory Committee.
The "Autorité des Marchés Financiers"
The AMF (French Financial Market Authority) was created by the merger of the COB ("Commission des Operations de Bourse" - French stock market regulator) and the CMF ("Conseil des Marchés Financiers", Financial Markets Council), grouped for the sake of streamlining. The AMF's mission is to ensure the protection of savings invested in financial instruments, information for investors and the proper functioning of financial instruments markets.
The AMF regulates and supervises all financial transactions involving listed companies. It allows the creation of unit trusts (SICAV) and mutual funds (FCP) and approves asset management firms at the time of their creation. It defines the regulatory operations framework for market companies (stock exchanges, settlement-delivery systems) and investment firms, and more generally for investment services professionals.
The AMF may conduct inspections or investigations and if necessary sanction violators.
The regulatory authorities in the United States
In the U.S., the Federal Reserve oversees the Federal Reserve Banks, 12 in number, which hold the mandatory reserves of banks. The direction of the Fed (the Board of Governors) is appointed by the President and confirmed by the Senate. The Fed implements monetary policy, supervises the banking system, maintains the stability of the financial system and provides a number of services, including the management of the Fedwire funds transfer system.
The SEC (Securities and Exchange Commission) ensures the transparency of financial markets, monitors the activity of market actors, and punishes breaches of regulations.
The regulatory authorities in the United Kingdom
In the UK, the Bank of England ensures the integrity and stability of the currency, the financial system stability and the efficiency of financial services. The FSA (Financial Services Authority) grants access to the market, regulates the markets and protects the end investor.