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The text explains why governments shape rule-making in capitalist economies, how regulation changes gains, losses, and resource choices, and why banking has historically been treated as a special case due to bank runs and liquidity crises.",{"@graph":14,"@context":65},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & Report",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/document/economic-commentary-the-background-for-regulation-financial-reformat-a-crossroads-banking-regulations/321467/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/economic-commentary-the-background-for-regulation-financial-reformat-a-crossroads-banking-regulations/321467.png","ImageObject",300,407,{"name":42,"@type":43},"Maeve","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-10-27","2026-09-21",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",12,{"@type":57,"mainEntity":58},"FAQPage",[59],{"name":60,"@type":61,"acceptedAnswer":62},"Why are banks described as a special case requiring regulation?","Question",{"text":63,"@type":64},"The text links the need to concerns such as bank runs, where perfectly sound banks can face crises because they cannot convert illiquid assets into cash quickly enough, potentially leading to failure.","Answer","https://schema.org",{"og:url":32,"og:type":67,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":69,"canonical":32},"index,follow",{"doc_id":71,"site_id":7},321467,1790304063,{"code":4,"msg":74,"data":75},"success",[76,80,84,88,93,98,103,107,112,115,119],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":77,"show_sort_weight":78,"slug":79},"Story & Novel",90,"story-novel",{"id":26,"doc_module":4,"doc_module_name":25,"category_name":81,"show_sort_weight":82,"slug":83},"Literature",80,"literature",{"id":33,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Exam",70,"exam",{"id":89,"doc_module":4,"doc_module_name":25,"category_name":90,"show_sort_weight":91,"slug":92},5,"Comic",60,"comic",{"id":94,"doc_module":4,"doc_module_name":25,"category_name":95,"show_sort_weight":96,"slug":97},6,"Technology",50,"technology",{"id":99,"doc_module":4,"doc_module_name":25,"category_name":100,"show_sort_weight":101,"slug":102},7,"Healthcare",40,"healthcare",{"id":104,"doc_module":4,"doc_module_name":25,"category_name":29,"show_sort_weight":105,"slug":106},8,30,"research-report",{"id":108,"doc_module":4,"doc_module_name":25,"category_name":109,"show_sort_weight":110,"slug":111},9,"Religion & Spirituality",20,"religion-spirituality",{"id":110,"doc_module":4,"doc_module_name":25,"category_name":113,"show_sort_weight":110,"slug":114},"World Cup","world-cup",{"id":116,"doc_module":4,"doc_module_name":25,"category_name":117,"show_sort_weight":116,"slug":118},10,"Lifestyle","lifestyle",{"id":120,"doc_module":4,"doc_module_name":25,"category_name":121,"show_sort_weight":89,"slug":122},19,"General","general",{"code":4,"msg":74,"data":124},{"doc_id":71,"user_id":125,"nickname":42,"user_avatar":126,"doc_module":4,"category_id":104,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":127,"file_id":128,"file_url":129,"file_type":130,"file_size":131,"view_count":55,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":89,"language":132,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":133,"faqs":134,"seo_title":135,"seo_description":12,"update_tm":136,"read_time":137,"preview_page_count":4},5909877438554,"https://ap-avatar.wpscdn.com/avatar/5600025385ad2bf12a7?_k=1778553567797529272","ECONOMICCOMMENTARY  \nToday,75 years after the founding ofthe Federal Reserve System and 55years after the nationwide bank holi-day of 1933,financial regulation is onceagain at a crossroads.The conflictbetween market forces and regulationhas created serious problems that can-not be avoided much longer.  \nAt issue is a very basic question:should we go forward with deregula-tion,or should we turn back?Theanswer will have an important bearingon the future structure of the financialservices industry.Should we makemarket forces exert a more powerfulinfluence in the financial sector,orshould we reinforce the blanket protec-tions of the regulatory process?  \nI think the choice should be clear:weshould rely on market forces.Relyingmore heavily on market forces requiressweeping away both mental and institu-tional cobwebs and making a clean breakwith the past.A piecemeal approach—responding to immediate problems andpressures—is not likely to get us veryfar unless we establish economic prin-ciples to guide deregulation.  \nThe principles we must dust off toguide deregulation of the financial sectorare little different from those at workin other industries.Moreover,applyingthese principles to the financial indus-try will require a lot more than simplybroadening the powers of banks.  \nIn debating and deciding on the stepsto take in deregulating the financialindustry,the fundamental goal shouldbe to reinvigorate market incentivesand tests of performance in bankingand other financial markets.The chal-  \nlenge is to eliminate regulations wherepossible and to strengthen regulationswhere necessary,building on marketforces rather than overriding or sup-pressing them.  \n# The Background for Regulation\n\nGovernment has a vital role in a capital-ist economy.A political and legal frame-work is indispensable for assuring indi-vidual liberties and property rights andfor setting the rules of the game inwhich markets operate.Within thatframework,owners of capital and laborwill direct their resources toward useswhere opportunities seem greatest.Ingeneral,private decisions made withfull comprehension of possibilities forgain and risks of loss will produce thebest results.  \nRegulating some activities and pre-cluding others alters the possibility ofgain and the risk of loss,and affectschoices with respect to resource use.In a static setting,where entry intoclosely competing endeavors is expen-sive,technology is unchanging,andinnovation is sluggish,the costs of reg-ulation may seem small or slow toappear,perhaps because they are hid-den in public subsidies.In such cir-cumstances,the intrusion of govern-ment regulation in the marketplacemay be able to achieve politicallydetermined results that otherwisewould be missed.  \nIn a more dynamic setting-such asthe markets for financial services,where competition has been strong,en-  \n# Financial Reformat a Crossroads\n\nby W.Lee Hoskins  \ntry by nonregulated firms has been rela-tively easy,and technology has beendynamic—the outcome can be quite dif-ferent,as we are now seeing.Aithoughcompetition holds down direct costs toconsumers,inefficiencies are evident,and through the federal deposit insur-ance mechanism,risk may well beshifted from private decision-makers tothe federal deposit insurance system.  \nThe attention banking has receivedover the years suggests that bankinghas always been a special case in whichregulation was necessary.Certainly asthe word \"bank\"was used in history,there was something unique about theblend of payment services attached tobank liabilities and commercial lend-ing.Almost from the beginning,banksrequired special charters from govern-ments.Those charters carried withthem restrictions on the way bankscould conduct their business.Whetherthese regulations were initially intendedto prevent fraud or to generategovern-ment revenues from a state-createdmonopoly is a matter of debate,but bythe time of the founding of the FederalReserve in 1913,regulation of bankswas the accepted practice.  \nThe legitim","cbCaidiTQww31VTb","https://ap.wps.com/l/cbCaidiTQww31VTb","pdf",1523330,"English","# The Background for Regulation\n# Financial Reformat a Crossroads\n# Banking Regulations","[{\"question\":\"Why are banks described as a special case requiring regulation?\",\"answer\":\"The text links the need to concerns such as bank runs, where perfectly sound banks can face crises because they cannot convert illiquid assets into cash quickly enough, potentially leading to failure.\"}]","Economic Commentary - The Background for Regulation - Financial Reformat a Crossroads - Banking Regulations | PDF",1789959399,13]