Financial Regulation: Where Do We Stand?

Charles Goodhart and Rosa Lastra

No 21590, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper provides a critical approach to the current political and economic debate on the state of financial regulation. It discusses why setting capital regulatory requirements causes tensions between bank managers and shareholders on the one hand and taxpayers on the other, leading to a Minsky cycle. It also re-imagines the central bank’s Lender of Last Resort Role, with the aspiration that the central bank becomes again “Leader of Last Resort†. The paper also considers bank competitiveness and its interaction with regulation and takes into account the counter-regulation movement in the US.

Keywords: Financial regulation; Capital; Liquidity; Central banking; Lender of last resort (search for similar items in EconPapers)
JEL-codes: E44 E58 G18 G28 G38 (search for similar items in EconPapers)
Date: 2026-06
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