Regulating investment business in the Single Market

Quarterly Bulletin 1994 Q4
Published on 01 December 1994

By Professor Richard Dale.

In this article, Richard Dale examines the regulatory framework for investment business put in place by the Capital Adequacy Directive (CAD) and other Directives, and focuses on the attempt to establish a ‘level playing-field’ for banks and other financial institutions conducting this business in the Single Market. He argues both that there is a general case for having differences in the regulatory approach towards banks and non-banks, and that - in attempting to establish a common treatment to apply to both types of institution - the CAD in fact introduces competitive distortions that favour securities financing at the expense of traditional bank lending.

Professor Dale was a Houblon-Norman fellow at the Bank between February and August this year. The views expressed in this article are his, rather than those of the Bank.

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