ABSTRACT
Deregulation of financial markets, revolutions in telecommunications and information processing, and global integration of financial markets have dramatically transformed the environment in which both private financial entities and public policy makers operate. “Policy coordination” means different things to different economists. The functioning of markets as well as tax and regulatory competition from decentralized government bodies work to discipline and constrain the public sector. US depository institutions, for example, have experienced price, product, and geographic deregulation; the deregulation of interest rate (price) controls; the elimination of some product restrictions; and the dismantling or erosion of some geographic restrictions on financial institutions. Moreover, international banking and securities market deregulation has been accompanied by the scrapping of various forms of capital controls in the United States and elsewhere, as well as liberalization of entry restrictions on foreign financial instruments and foreign financial institutions.
