Abstract:
The global financial crisis of 2008 will undoubtedly go down as one of the worst historical events that the world has ever experienced. A crisis so catastrophic that it was responsible for bringing the global financial markets to its knees. It is for this reason that 10 years on, the international financial community is still hot on the pursuit of financial stability so as to ensure that the world never again experiences another financial crisis of that magnitude or at the very least, is able to better combat one should it arise: a quest that haunts it to this very day.
By far, one of the most significant lessons that the 2008 global financial crisis had to offer was that the international financial regulatory framework was severely wanting to the extent that it was unable to keep up with and further contain financial innovations and the growth that came with it. Consequently, a campaign to renovate the global financial regulatory framework ensued-a movement that South Africa is a fully participating member of. It is for this reason that South Africa has since adopted the Twin Peaks model of financial regulation through the recent enactment of the Financial Sector Regulation Act 9 of 2017 (FSRA).
Chapter one of the dissertation thus introduces the concept of financial stability by defining it and then proceeds to interrogate whether provision was made for it in the financial regulatory framework prior to the 2008 global financial crisis. Subsequently the causes of the crisis are investigated before concluding with a discussion on the emergence of financial stability as a core regulatory objective post the crisis.
In chapter two the South African Twin Peaks model of financial regulation is introduced and discussed. That is, the enactment of the Financial Sector Regulation Act, its objectives as well as the institutional architecture that it seeks to implement. Thereupon a discussion follows of the South African Reserve Bank’s financial stability mandate as bestowed upon it by the FSRA as well as the roles of the Prudential Authority and the Financial Sector Conduct Authority with regards to achieving financial stability.
In chapter three, a comparative investigation is undertaken of Australia as the pioneer of the Twin Peaks model, having been the first to implement it in 1998. In this chapter it is attempted to answer the pivotal question of whether the regulatory model is transferable or not.
Ultimately, in chapter four conclusions are reached regarding the underlying question of this discourse which is: post the 2008 global financial crisis, is the Twin Peaks model of financial regulation a cure for South Africa in its pursuit of financial stability?
