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International Financial Regulation: Why It Still Falls Short

Author

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  • William White

    (C D Howe Institute)

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.

Suggested Citation

  • William White, 2020. "International Financial Regulation: Why It Still Falls Short," Working Papers Series inetwp131, Institute for New Economic Thinking.
    • Handle: RePEc:thk:wpaper:inetwp131
    DOI: 10.36687/inetwp131
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    File URL: https://doi.org/10.36687/inetwp131
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    Cited by:

    1. Richard Kozul-Wright, 2020. "Recovering Better from COVID-19 Will Need a Rethink of Multilateralism," Development, Palgrave Macmillan;Society for International Deveopment, vol. 63(2), pages 157-161, December.

    More about this item

    Keywords

    Too big to fail; financial safety; financial reform; financial crises; implicit subsidies; political economy;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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