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Simple Rules for Financial Stability

Author

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  • John B. Taylor

    (Department of Economics, Stanford University)

Abstract

Thank you for the opportunity to speak at this conference on financial stability. I would like to use the opportunity to discuss three interrelated proposals to bolster and maintain financial stability. The first would reform the rules of bankruptcy to handle large financial institutions with a minimum of disruption. The second would put aside any plans for temporary countercyclical capital buffers and focus macro-prudential policy simply on setting permanent and appropriate capital and subordinated debt ratios. The third would start to move back to a more rules-based monetary policy. Taken together these proposals would constitute a sound overall strategy to improve financial and economic stability.

Suggested Citation

  • John B. Taylor, 2013. "Simple Rules for Financial Stability," Economics Working Papers 13106, Hoover Institution, Stanford University.
    • Handle: RePEc:hoo:wpaper:13106
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    References listed on IDEAS

    as
    1. John B. Taylor, 2013. "A Review of Recent Monetary Policy," Economics Working Papers 13103, Hoover Institution, Stanford University.
    2. Darrell Duffie, 2010. "The Failure Mechanics of Dealer Banks," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 51-72, Winter.
    3. Darrell Duffie, 2010. "The Failure Mechanics of Dealer Banks," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 51-72, Winter.
    4. Kenneth E. Scott & John B. Taylor (ed.), 2012. "Bankruptcy Not Bailout," Books, Hoover Institution, Stanford University, number 5, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Günes Kamber & Özer Karagedikli & Christie Smith, 2015. "Applying an Inflation-Targeting Lens to Macroprodential Policy "Institutions"," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 395-429, September.

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