Commentary: Systemic Risk: Changing the Regulatory Perspective

Jean Rochet

International Journal of Central Banking, 2010, vol. 6, issue 34, 259-276

Abstract: The article puts forward the view that the regulatory perspective on systemic risk should be changed drastically. The sub-prime crisis has indeed revealed many loopholes in the supervisory/regulatory framework for banks—in particular, the inability to deal with the too-big-to-fail syndrome and also the lack of resiliency of interbank and money markets. To a large extent, the contagion phenomena that took place in these markets were the necessary outcomes of the passive attitude of banking supervisors, who have let large banks develop a complex and opaque nexus of bilateral obligations. We propose two reforms: adopting a platform-based (instead of institutionbased) regulatory perspective on systemic risk and encouraging a generalized move to central counterparty clearing.

JEL-codes: G21 L51 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (11)

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