The United States’ financial regulatory structure is notoriously complex and defies categorisation. The structure embodies some of the principles of the Twin Peaks model, and yet a foggy mountain range better describes the US regulatory architecture – multiple peaks with murky demarcation. Criticism of the US structure is, at the same time, too easy and too hard. The structure is easy to criticise because of blatant overlaps that scream inefficiency, yet criticism is difficult because the clunky and complex structure works reasonably well, or at least is not obviously the primary cause of recent regulatory failures. Certainly, the Global Financial Crisis exposed regulatory gaps, the under-regulated shadow banking system is the classic example. Yet the then existing regulatory architecture did not account for the failure of agencies to utilise their authority in the run-up to the crisis.Structure may be important, but leadership is essential. This chapter begins with an overview of the US financial regulatory structure followed by a closer examination of the financial stability architecture in the US following the Global Financial Crisis and the very recent developments in that arena. Those recent developments are then evaluated alongside the Twin Peaks model.

As China’s financial system becomes more complex and integrated, interest in and discussion of potential structural reform has intensified. In particular, many commentators advocate for a move towards the Twin Peaks model, along the lines of Australia’s experience. This chapter begins with an overview of China’s financial sector and sources of risk to lay the foundation for a country-specific study. There follows a brief discussion of China’s current financial regulatory architecture and an examination of how the authorities have responded to the sources of risk laid down at the start of the chapter. The shortcomings of the regulatory responses to date have sparked a call for reform of the regulatory structure and these reform proposals are subject to scrutiny. It is concluded that Twin Peaks might serve as a model for China, which, as revealed, is not the latest reform trend announced by the Chinese government and what can be done next to address the unresolved problems after the implementation of the latest reforms.

This chapter reviews the philosophy that underpinned the introduction of Twin Peaks in Australia in 1998, the lessons that have been learned from the Australian experience and from the global financial crisis, and the way in which those experiences might have shaped the recommendations of the Australian Financial System Inquiry (which recommended Twin Peaks) were it being undertaken today, rather than two decades ago. The chapter concludes by noting that no regulatory architecture is perfect, and no architecture is likely to be optimal under all circumstances; architecture is not an end in itself. A good architecture does not guarantee good regulation; more than anything else good regulation requires good quality regulators. A strong architecture is one that supports good regulators by establishing clarity of objectives, minimising conflicts, empowering the regulators to act, and doing as much as possible to facilitate a common approach to risk across the financial sector. While the Twin Peaks architecture provides such support, it is a necessary, but not sufficient, condition for good regulation.