Economic issues are quite sensitive and need to be addressed with equal importance. One of the approaches is through banking regulation. There is much controversy surrounding this issue. The essay below seeks to identify the necessity of banking regulation to the individuals and companies as well.
Husock (2011, p.1) indicates that during the recession in America, many of the citizens suffered a lot due to the inability to buy their basic necessities leave alone living a decent lifestyle. It is believed that one of the measures that can be employed to prevent such a situation is by having a banking regulation system which controls the amount of money in circulation. Though it is believed to have negative effects, such a move also has positive aspects. It helps in balancing the benefits and costs (Bernanke, 2006, p.1). It benefits the citizens of a country as indicated below.
Regulating the money in circulation is beneficial to a country’s citizens. First of all, it saves the global economy by preventing inflation. As such, Smith (2012, p.1) indicates that to prevent such an occurrence, banks should be coerced into ensuring that they keep a tight grip on their capital and liquidity standards. By controlling inflation, the citizens are safe since their investments are secure. They can also get the services they need at a reasonable cost.
Bonn (2005, p.5) indicates that there are other benefits of the regulation that can be realized for the individuals. First of all, it gives financial firms the liberty to adopt new practices and also enact measures that prove to be more beneficial to all. Secondly, the move also ensures that there is a healthy competition between service providers. This increases the efficiency of the banks and the people end up benefitting from more refined services. From this explanation, it can be seen that when there is regulations, the citizens benefit in the long run.
Bernanke, B.S. (2006). Bank Regulation and Supervision: Balancing Benefits and Costs. [Online] Available at http://www.federalreserve.gov/newsevents/speech/bernanke20061016a.htm [Accessed 1st June 2012]
Bonn. 2005. An Increasing Role for Competition in the Regulation of Banks. [Online] Available at http://www.internationalcompetitionnetwork.org/uploads/library/doc382.pdf [Accessed 1st June 2012]
Husock, H. 2012. The Trillion-Dollar Bank Shakedown that Bodes III for Cities. [Online] Available at http://www.city-journal.org/html/10_1_the_trillion_dollar.html [Accessed 1st June 2012]
Smith, G.T. 2012. Frankfurt. [Online] Available at http://online.wsj.com/article/SB10001424052748703649004575436950880560936.html [Accessed 1st June 2012]