# Supervision

- Canonical URL: https://www.gerhardmerk.de/supervision
- Post ID: 590949
- Modified: 2023-07-25T21:11:48+00:00
- Language: en

## Definition

In the context of financial markets, supervision by supervisory authorities established by law. The primary objective of supervision is to ensure the functioning and stability of the financial sector by protecting creditors while observing market principles. - The benefits of supervision must be set against its costs, because supervision ties up scarce resources both on the part of the banks and insurance companies and on the part of the supervisory authorities (which are generally well staffed). The costs thus incurred are ultimately passed on to market participants. In addition, opportunity costs arise if the banks (because of the excessive regulatory burden) only serve market participants' preferences to a limited extent or not at all, or if innovations are even inhibited in this way. With increasing regulatory density, such dangers increase. - Finally, it should not be overlooked that supervision can also be misused to protect against market entry and additional competition, or that its regulations have this effect unintentionally. - The supervisory authorities try to counter most of the disadvantages listed by means of supervisory discussions, impact studies and calls for advice. As a result, the relationship between the Federal Financial Supervisory Authority (BaFin) and the institutions it supervises has developed (especially in Germany) and is generally considered to be harmonious by the parties involved. - See Supervisory Triangle, Investor Protection, Committee Mania, Impact Studies, Banking Supervision, European, Banking Supervision, European, Fees, Calls for Advice, Capture Theory, Consolidating Supervisor, externality, fragmentation, supervisory, Five Hundred Rule, Same Business - Same Rule principle, good governance, leaning against the wind, Murphy's Law, pankratium, Peter Rule, legal risks, SarbanesOxley Act, solar energy, savings protection, system conflict, financial market, subgroup supervision, commitment period. - Cf. the tabular comparison of the individual tasks in banking supervision and payment systems supervision in the Deutsche Bundesbank's Monthly Report of January 2004, p. 45, BaFin's Annual Report 2004, p. 33 ff, p. 43 ff (overview and description of tasks of the international bodies [which even experts can hardly overlook]), p. 93 ff, BaFin's Annual Report 2004, p. 32 ff, as well as the respective annual reports of BaFin, Deutsche Bundesbank's Monthly Report of January 2006, p. 41 ff, Deutsche Bundesbank's 2007 Annual Report, p. 96 ff. (expanded tasks in the wake of new regulatory requirements), Deutsche Bundesbank's December 2009 Monthly Report, p. 53 ff. (international supervisory cooperation), BaFin's 2013 Annual Report, p. 165 (status of deliberations on product supervision and oversight at securities services companies). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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