The financial crisis has prompted a number of fundamental questions, not least of which is the relationship between financial institutions and regulators. In particular, the reputation of principles based regulation (PBR), lauded as a key example of ‘new governance’ techniques of regulation prior to the crisis, has taken a severe battering. Detailed rules did not fare much better, but advocates of ‘new governance’ techniques would not have expected them to: their failure was to be expected. It is the fate of PBR that should therefore cause us to look long and hard at what has become increasingly accepted wisdom amongst regulatory scholars and ‘better regulation’ practitioners over the last decade or so. This paper asks what lessons can be learned from the crisis as to the effectiveness and appropriate role of principles based regulation, and what future it may have. It sets out four ‘ideal types’ of PBR in the Weberian sense: analytical constructs that are rationalised abstractions of particular practices: formal, substantive, dyadic and polycentric PBR. It then charts the rise and fall of PBR in financial regulation over the last few years and offers some tentative predictions for its future
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