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Markets and Morals: Embedding values in the governance of the financial services sector

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Markets and Morals: Embedding values in the governance of the financial services sector

The power convergence between financial corporations and government and the regulatory reforms supervising this close relationship have been a matter for discussion.

This paper focuses on those elements that allow for better control in this relationship. Regulatory reform can only be successful if it influences the elite sources of power and responsibility within the financial system. The challenge is therefore not only to make rules that will bring about more systemic stability and render safer the global financial system, but also to make rules that will solicit the cooperation of these special interests in power. The financial system is indeed far too complex to be governed by narrow directives, and inputs from experienced insiders are critical. The end of financialization and the need for reinforcing fiduciary duty between and across all actors in the financial system are two possible ways to get the high circles of finance on the right side of the law. However, there are technical restrictions for the implementation of the solutions; it is difficult to change the mindset and instill fundamental social values in these powerful (financial) sources. Therefore, societies may need to lower their dependence on the financial sector for the delivery of essential social services and environmental sustainability.