The regulatory role of government in the private sector involves creating and enforcing rules to ensure fair practices, protect public interests, and promote economic stability. Governments establish regulations to monitor industries, prevent monopolies, ensure consumer protection, and maintain environmental standards.
Example: In the financial sector, governments implement regulations such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States. This act was enacted in response to the 2008 financial crisis to increase oversight of banks and financial institutions. It includes measures like stress tests for banks, limits on speculative trading, and the establishment of the Consumer Financial Protection Bureau (CFPB) to protect consumers from unfair practices. By regulating these aspects, the government aims to prevent financial crises and protect consumers, thereby promoting a more stable economy.