220.127.116.11 National Economic Regulation
There is a hierarchy of economic regulation within a country, with each layer having to conform to the requirements of the layer above, culminating in national law and government-controlled financial and social regulation:
- Employees are subject to their employer’s regulations.
- Local government regulates businesses of all sizes: e.g. in terms of trading hours, planning permission and licences to operate.
- National government also regulates businesses on such matters as health and safety, restrictive practices and consumer protection.
- Central banks may be formally independent from national governments.
- Financial regulation, though, might be patchy in its coverage because there can be several organisations involved without any unifying framework to allocate terms of reference to them. The Board of Governors of the Federal Reserve System, for example, can set regulations for minimum levels of bank reserves but it cannot set rules for how the ratings agencies assess the risk of complex financial products.
National regulations tend to be fairly mature: most of the necessary institutions and processes exist. That is not, of course, to say that its implementation in any country is the best framework that could have been devised; each country arrives at its own shifting balance between political and economic considerations and no system is immune to malpractice.
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