This book is a compilation of 10 papers given at a Conference of the same name in November 1991. I confess that I found the papers both fascinating and infuriating; fascinating because recent scandals like the Japanese securities houses, Salomons, United States Savings & Loans and BCCI raise pressing questions about whether this goliath of a business can and should be regulated; infuriating because the language of some of the papers is hard for a non-economist to follow and because the contributors often come to seemingly perverse conclusions, provoking the response, “Yes, but …”. This criticism is partially met by the book’s also containing four brief discussion papers challenging some of these conclusions.

Despite the varied backgrounds and styles of the contributors, some strong recurrent themes do emerge from the papers. There are two introductory papers from the Chairmen of two of the main regulators, Sir David Walker of the SIB and Richard Breeden of the SEC, but the main themes are probably best approached through the last paper by Professor Benston. This is a trenchant attack on banking regulation in general and international regulation in particular. Although instinctively a free-marketeer myself, there seem to me at least three criticisms of his laissez-faire position: (1) Empirical evidence that free competition in banking improves economies is hard to find; the closed oligarchic banking systems of Germany and Japan have contributed to a far more stable economic environment than the open competitive system in the U.K. (2) Even if central banks are unlikely to commit the same errors as in the 1929 crash, the danger that the collapse of one or two banks might lead to a general banking crisis (“systemic risk”), through depositor runs on otherwise solvent banks or the breakdown of any pooled payment system, is too great for central banks not to enforce some prudential requirements. (3) For most citizens of a developed country, exposure to the banking system is virtually compulsory, yet depositors at banks have effectively no information upon which to assess the relative riskiness of one bank compared to another; so domestic authorities are forced to operate some form of deposit insurance against bank default, even though this in turn can lead to irresponsible banking (e.g., U.S. Savings & Loans).

The third paper by Sydney Key and Professor Scott grudgingly accepts the need for some regulation and concentrates on who should do it, the country of origin (the “home” country) or the country of operation (the “host” country), and to what extent harmonized international regulations are required. One key theme is the problem of overseas banks’ setting up a branch rather than a subsidiary in the host country. To an host country customer, the branch of an overseas bank looks like a domestic bank, but to the host country regulator it is almost as hard to impose any financial controls on such a branch as on its head office overseas.

The fourth paper by Joseph Bisignano takes up the contrast between the German/Japanese banking model and the Anglo-Saxon type, suggesting somewhat contentiously that the difference may arise from different attitudes to contractual obligations. The language of this paper is particularly difficult, but it does go on to deal with another recurring theme, that of defining the extent of the financial system that should be regulated given the increasing