⚠️Automatic translation pending review by an economist.
Regulation is normative; it is based on the formulation of specific, often quantitative rules. We talk about capital regulation, for example, in relation to the Basel ratios, insofar as a numerical rule is prescribed. Supervision consists of monitoring the practices of banks, and is therefore qualitative in nature.
The current banking union project in Europe aims to make the ECB a supervisor (rather than a regulator), which will monitor banks’ practices and verify that they comply with the law and regulations.
J.P.
