At the SEC Annual International Institute for Securities Market Development, SEC Commissioner Michael Piwowar delivered opening remarks about the importance of effective regulation and the development of capital markets.
Commissioner Piwowar first explained the significance of the two-week global training program, turning quickly to a discussion of capital markets. Commissioner Piwowar stated that an overarching theme of the training program is that “a jurisdiction’s institutional and regulatory policy framework can strongly influence capital market regulation,” noting that countries with better investor protections tend to have larger and deeper capital markets.
Commissioner Piwowar referenced a recent paper titled “Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges,” which investigated a given country’s financial regulatory system, its tax system and the effects on capital market development. According to the Commissioner, the report found that regulatory and tax systems governing retirement savings in an economy play an important role in capital market development, and recommended that retirement savings rules and tax laws be designed in a way that encourages a larger part of national savings to be invested through capital markets. Additionally, Commissioner Piwowar explained, the report showed “the balance between capital market finance and bank lending matter,” and concluded that an overreliance on banks comes at the cost of reduced economic growth.
Overall, Commissioner Piwowar stated, promoting high-quality regulatory standards worldwide creates a “virtuous circle” in which effective capital market regulation and development leads to overall economic growth.
See: Commissioner Piwowar’s Speech.
See also: “Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges,” by Christoph Kaserer and Marc Steffen Rapp.