Institutional architecture for financial supervision: a case study

The paper examines the institutional architecture for financial supervision of a small jurisdiction and proposes reforms with a view of achieving more efficient and cost-effective financial supervision. The central argument of the paper is that there are complementarities and information synergies between prudential financial supervision, which aims at safeguarding the integrity and stability of the financial system, and the core central banking function of monetary policy. The point is made that that monetary policy and prudential supervision for financial stability should therefore be put under one roof, particularly in small jurisdictions, where duplication of research and information on the financial system leads to the wasteful use of limited human, technical (which includes technology) and financial resources.