How Can Financial Supervisors Improve the Effectiveness of Corporate Governance?

Private Sector Opinion 18: New initiatives are under way to improve governance, including guidelines from supervisory standard-setting bodies such as the Basel Committee on Banking Supervision. These initiatives should help, but more is needed to change board culture and behavior. Financial supervisors have an important stake in ensuring sound corporate governance as a strong underpinning for effective supervision. This paper suggests measures that financial supervisors can take to improve governance in regulated financial institutions.