Jenaer Schriften zur Wirtschaftswissenschaft Financial Supervision Fragmentation and Central Bank Independence: The Two Sides of the Same Coin ?

This paper analyses how the central bank's role in the monetary institutional setting can affect the unification process of the overall financial supervision architecture. Using indicators of monetary commitment and central bank independence, we claim that these legal proxies show an inverse link with financial supervision unification. Therefore, the trade off still holds between the supervisory and the central bank involvement per se, however, monetary commitment and independence do also matter. In this respect, in an institutional setting characterized by a central bank deeply and successfully involved in supervision, or legally independent, a multi-authority model is likely to occur. ♦ The authors are indebted for helpful suggestions to Helge Berger, Chip Chappell and Lucia Dall Pellegrina. All remaining errors are the authors' responsibility.