The Rationale for Integrating Financial Supervision in Latin America and the Caribbean

Several developed and developing countries started to integrate their specialized supervisory institutions into a single entity during the past few years. A debate on the pros and cons of integrated supervision models emerged recently. Issues in favor and against integration have been identified, but they have not yet been discussed in the context of a formal analytical framework or with a regional perspective. The present study fills both gaps. It examines the rationale for the adoption of an integrated approach utilizing a methodology to analyze the efficacy and the efficiency of the specialized and integrated approaches in meeting the main objectives of financial regulation in the context of Latin America and the Caribbean countries. The paper considers the main arguments against and in favor of integration that are known to affect both approaches in practice and that have been discussed in the existing literature.