The current financial crisis has undoubtedly shown the inability and/or unwillingness of the existing supervisory and regulatory framework to deal with the present and more and more integrated and liberalized financial markets. The traditional lines of demarcation between financial firms and products have been blurred by the emergence of financial conglomerates, combining in a single organizational structure at least two major financial services activities and financial innovations. Creative finance has added a further element of instability to the markets, and the securitization of all kinds of credit has led to the leveraged propagation of the financial turmoil from the USA to the rest of the world.

In this context, the established regulatory and supervisory structure has not been able to properly oversee the financial markets and prevent the contagion of financial crises. Was it just a matter of inadequate and lazy prudential supervision or the architecture of supervisory and regulatory national agencies also played a significant, though perhaps less striking, role? We think that financial architecture had a role and contributed, together with unfair regulatory governance in terms of independence, accountability and transparency practices to create a less stringent framework of preconditions to effective prudential supervision.

When we deal with the architecture of national supervisory agencies, the two key questions are: (1) Should prudential supervision be integrated, covering banking and securities and/or insurance markets, or decentralized in multiple specialized authorities, one for each sub-sector? (2) Should banking and financial supervision be conducted inside or outside central banks?

Analyst Magazine, Financial Supervision, Financial Crisis, Organizational Structure, Financial Innovations, Career Planning, Monetary Policy, Organization for Economic Co-operation Development, OECD, Financial Sector, Social Environment, Insurance Markets.