ABSTRACT
Ouring the last two decades, the principal differences in views on the role of regulation in financial markets have remained unchanged. Those who beIieve that market forces alone are sufficient to ensure competition and efficiency and that relying on investors' perceptions of risk will force institutions to maintain sound practices build their case on the views and findings of partidpants in a variety of commissions and studies that have dealt with issues of finandal regulation.1 Others doubt that market forces can do the whole job-particularly in ensuring soundness and preventing confIicts of interest and the concentration of financial resources-and beIieve (with other participants in these earIier commissions and studies) that maintaining confidence in the financial system requires govemment intervention to minimize the risks to savers and investors that can result from unsound or fraudulent practices.
