A good regulator understands the causes of the crises and takes steps to prevent them from occurring.

Who or what is a single regulator? Is it a regulatory body that overseas the functioning of the three principal sub-markets banking, insurance and securities in any given geography? Is it a regulator that transcends geographies, ensuring people in different countries access to a uniform sub-market? Or is it a leviathana `super-super-regulator'that spans both geographies and financial markets?

In this short essay, I will argue for the view that it is neither logical nor feasible to have a single regulator for the entire EU, supervising all three markets. The strength of this argument relies on one simple premise: Every proposed change comes at a cost; every action involves a trade-off. Any extreme change is usually neither intellectually appealing nor practically feasible a super-super regulator is a utopian concept and ultimately not an inspiring idea.

Secondly, and almost as important, having differences in regulation across national boundaries hurts the market. Firms cannot participate across geographies with equal ease, and this negatively impacts product markets. For example, in 2001, over 22% of the UK insurers complained that their biggest problem in trying to access the European markets was the wide divergence in regulation.

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