Revolutionary changes rocked financial markets in the 1980s and 1990s: the collapse and government bailout of the thrifts, the shrinking of traditional banking, the growing dominance of institutional investors, the mushrooming of derivatives markets, and the expansion of trading in foreign securities.Franklin R. Edwards describes these changes and the reasons for them -- and their consequences for the financial system and for regulatory policy. He examines the implications of the growth of mutual funds and derivatives markets for systemic stability and whether the decline in traditional banking undercuts monetary policy effectiveness. The author proposes a new regulatory approach that would facilitate adjustment to the new financial realities and bolster financial stability. Index.