The Role Of Financial Regulation In Successful Economies

Overview

Financial sector regulation is important because it provides stability to the markets. It serves to protect customers, workers and taxpayers from moral hazards that are inherent in certain decisions. 

Its functions include the formulating and implementing of a country’s monetary policy, ensuring the efficiency of the economies financial system. Whilst educating its citizens about the monetary and economic situation of the country.  

Financial regulation is there to achieve and maintain price stability in the interest of balanced and sustainable economic growth in a country’s economy. Together with other institutions, it also plays a pivotal role in ensuring financial stability. 

Ensuring that the county’s money, banking and financial system as a whole is sound, meets the requirements of the economy and keeps abreast of international developments. Therefore there’s a strong positive relationship between financial regulation and successful economies. 

The simple response is that well-developed, smoothly operating financial markets play an important role in contributing to the health and efficiency of an economy. I mean imagine if we were all running around like headless chickens with no sense of direction or even an economy being run without any rules, guidelines or bylaws. 

Financial regulation plays an indispensable role in the overall development of a country. Because it governs the financial sector and its financial institutions, which have traditionally, been the major source of long-term funds for the economy. These institutions provide a variety of financial products and services to fulfil the varied needs of the commercial sector.