Financial services industries and public authorities are facing many challenges after the last global crisis, the worst economic and financial crisis since the 1930s, which erupted in 2007-2008. This crisis entailed tremendous changes in the regulation and supervision of financial institutions. On the one hand the main aim of these changes is to restore public confidence and to prevent or at least reduce the public costs of such crises in the future. On the other hand it is always important to understand the impacts of strict regulations to the banking sector and society at large. This article reviews the current challenges in financial services both to public authorities and financial institutions. The purposes of this article are twofold. Firstly, to provide a theoretical discussion of the role of banks in society, the importance of banks in financial systems and an analysis of reasons and objectives of the strong public regulation of credit institutions. Secondly, to review current international thinking about requirements to the regulatory framework to ensure a stable financial sector and outline the main practical impacts on banks and their customers. The article highlights a number of important areas that should be kept in mind to achieve and effective and efficient financial services regulation framework and a reasonable balance between financial stability, financial development, economic growth and public/private costs and benefits.
