BANKING DEREGULATION AND FINANCIAL INNOVATION

Deregulation took place in the 1980s. In 1979, Mutual Funds were created. The second market was born in 1983. The banking law was changed in 1984. In 1985 and 1986 were authorized the issue of negotiable debt securities, monetary SICAVs were created, the monopoly of stockbrokers was abolished with the creation of brokerage firms and the futures market for financial instruments (MATIF) was created. The stock options market (MONEP) was created in 1988 which also saw the opening of an options market on MATIF and the launch of futures and options on the stock market index, the CAC 40.

Deregulation in the United States

Following the abolition of the Steagall Act, commercial banks, which until now could only rely on customer deposits, are embarking on the market activities which make Wall Street fortunate.

They compete with investment banking specialists, such as Goldman Sachs, Morgan Stanley or Lehman Brothers.

The abolition of the border between regulated professions and deregulated professions leads to the explosion of loans and financial innovation .

 The following years are years of market rises that allow the banking giants to post record results.

The subprime crisis shows the return to the drifts, with again massive loans with clearly underestimated risks.