Front Matter
Author:
Mr. Marc G Quintyn
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Mr. Michael W Taylor
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Abstract

In nearly every major financial crisis of the past decade-from East Asia to Russia, Turkey, and Latin America-political interference in financial sector regulation helped make a bad situation worse. Political pressures not only weakened financial regulation, but also hindered regulators and supervisors from taking action against troubled banks. This paper investigates why, to fulfill their mandate to preserve financial sector stability, financial sector regulators and supervisors need to be independent-from the financial services industry as well as from the government-as well as accountable.

The IMF launched the Economic Issues series in 1996 to make the IMF staffs research findings accessible to the public. Economic Issues are short, nontechnical monographs on topical issues written for the nonspecialist reader. They are published in six languages—English, Arabic, Chinese, French, Russian, and Spanish. Economic Issue No. 32, like the others in the series, reflects the opinions of its authors, which are not necessarily those of the IMF.

©2004 International Monetary Fund

Series Editor

Asimina Caminis

IMF External Relations Department

Cover design and composition

Massoud Etemadi, Julio R. Prego, and the IMF Multimedia Services Division

ISBN 9781589063099

ISSN 1020-5098

Published January 2004

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Preface

This Economic Issue is based on IMF Working Paper WP/02/46, Regulatory and Supervisory Independence and Financial Stability, March 2002. Brenda Szittya prepared the text. Citations for the studies reviewed are provided in the original paper, which readers can purchase from IMF Publication Services ($15.00) or download from www.imf.org.

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