Fragmentation of financial markets due to poorly designed or overly stringent legislation may have financial stability benefits that policy-makers would do well to recognise, according to Adair Turner, chairman of the UK's Financial Services Authority.

Addressing an audience at the Sveriges Riksbank, Turner said there was evidence that cross-border lending was one of the most volatile types of capital flow, prone to "exuberant surges and sudden stops". This, he said, implied legislation that