Asia-Pacific News

Regulation Won't 'Kill the Golden Goose': Mobius

Regulation in the financial industry will not "kill the golden goose", said Mark Mobius, Executive Chairman of Templeton Asset Management.

"The forces against regulation are very strong in Washington... There are $600 trillion in derivatives outstanding. Lots of money is being made with derivatives. It's not going to go away," Mobius said on CNBC.

Regulation Won't Kill the Golden Goose: Mobius

"The proof will be in what happens at the regulatory, administrative level - to implement whatever is passed in congress."

Mobius said the industry should look at where the incentives are, and recommended that a small tax be imposed.

"In the case of the financial derivatives, I think there should be a small tax -- a small fee put on financial derivatives, maybe 10 basis points," he said.

If a tax is imposed, you will have exposure, Mobius explained. "You must have liquidity and you must have transparency. We need to put those kinds of reforms in place."

Government Regulation

When asked if the reforms could turn the financial industry into the likes of utility companies, Mobius said he was "all for it".

"If stock exchanges, savings banks (and) those institutions became utilities, I'm all for it, because that's the service that has to happen properly and regulated for the market to work."

Mobius also said he does not think volatility or trading will go away, as everyone, including the U.S. Administration, realizes that "this is essential for the workings of a free economy."

With regards to regulation in Asia's financial sector, Mobius noted that interest in the region has heightened.

Credit for swaps, spreads for Greece and Portugal are far higher than in China, he noted.

"People are more confident in putting money into these banks. The dangers that the lessons we're learning now in the west are not learned in Asia. Hopefully they'll adopt some of the regulatory mechanisms that are being learned."