The Shape of Regulation to Come

José Jorge ()
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José Jorge: Faculdade de Economia, Universidade do Porto, cef.up

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: We identify the main changes in the global financial system over the last decade, pointing out the fragilities of the existing banking regulation. We then propose a variety of responses to the new challenges, like limiting banks’ non-core liabilities, introducing contingent capital and risk-weights that account for systemic risk, combining monetary policy with policies that promote financial stability, improving international cooperation regarding liquidity facilities, integrating regulation on deposit insurance and resolution of bank default. We point out some unexpected difficulties which threaten the reform agenda, and conclude with a warning: the business cycle matters when assessing the cost of new regulations, and imposing tighter rules that will create a credit crunch during a recession is questionable.

Keywords: Keywords:; Financial; regulation (search for similar items in EconPapers)
JEL-codes: G28 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2016-01
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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