International Financial Regulation: Why It Still Falls Short

William White ()
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William White: C D Howe Institute

No inetwp131, Working Papers Series from Institute for New Economic Thinking

Abstract: While recent reforms are welcome in many ways, there are still significant reasons to doubt that the post-crisis tightening of international financial regulation guarantees future financial and economic stability. The most important reason is that the reforms have focused too narrowly on ensuring that an unstable financial sector will not aggravate downturns by restricting the supply of credit. More attention needs to be paid to ensuring that an overly exuberant financial system does not weaken other parts of the economy by encouraging a rapid buildup of debt during upturns. Some combination of time-varying monetary and regulatory policies (a macrofinancial stability framework) will be required to do this. In addition, many of the individual regulatory measures taken to date, both macroprudential and microprudential, have shortcomings. Their coherence as a package has also been questioned.

Keywords: Too big to fail; financial safety; financial reform; financial crises; implicit subsidies; political economy (search for similar items in EconPapers)
JEL-codes: E02 E32 E42 E52 E58 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020-07-25
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:inetwp131

DOI: 10.36687/inetwp131

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