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Past and future regulation to prevent a systemic financial crisis

Author

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  • Mario Sarcinelli

    (Dexia Crediop and Italian Banks' Association (ABI))

Abstract

The article is a revised and updated version of that published on the March 2010 issues of Moneta e Credito. It was there claimed that, up to now, the G20 has supervised the process to revitalize the real economy affected by the Great Recession through fiscal stimuli and a very easy monetary policy, and to rescue the battered financial system by injecting capital into giant banks and firms. The G20 is now turning its attention to financial regulation, with the FSB as its main operational arm. The ideas that are being proposed stress the need for disincentives toward too much risk taking (more capital, higher liquidity, limits to remunerations and bonuses, etc.), particularly by big and complex financial institutions that are likely to entail systemic risks. The paper maintains that, as the disincentive approach is insufficient to deter financial managers looking for power, some kind of segmentation needs to be introduced, as suggested by Paul Volcker.

Suggested Citation

  • Mario Sarcinelli, 2010. "Past and future regulation to prevent a systemic financial crisis," PSL Quarterly Review, Economia civile, vol. 63(253), pages 103-129.
    • Handle: RePEc:psl:pslqrr:2010:22
    as

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9431/9326
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    References listed on IDEAS

    as
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    3. Thomas Ferguson & Robert Johnson, 2009. "Too Big to Bail: The "Paulson Put," Presidential Politics, and the Global Financial Meltdown," International Journal of Political Economy, Taylor & Francis Journals, vol. 38(2), pages 5-45.
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    5. Thomas Ferguson & Robert Johnson, 2009. "Too Big to Bail: The "Paulson Put," Presidential Politics, and the Global Financial Meltdown," International Journal of Political Economy, Taylor & Francis Journals, vol. 38(1), pages 3-34.
    6. Alessandro Roncaglia, 2010. "Le origini culturali della crisi," Moneta e Credito, Economia civile, vol. 63(250), pages 107-118.
    7. Xavier Freixas & Jean-Charles Rochet, 1997. "Microeconomics of Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061937, April.
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    9. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    10. Philip Lowe & Claudio Borio, 2002. "Asset prices, financial and monetary stability: exploring the nexus," BIS Working Papers 114, Bank for International Settlements.
    11. Yeva Nersisyan & L. Randall Wray, 2010. "The global financial crisis and the shift to shadow banking," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 7(2), pages 377-400.
    12. Fabrizio Fabi & Sebastiano Laviola & Paolo Marullo Reedtz, 2005. "Lending decisions, procyclicality and the New Basel Capital Accord," BIS Papers chapters, in: Bank for International Settlements (ed.), Investigating the relationship between the financial and real economy, volume 22, pages 361-91, Bank for International Settlements.
    13. Anil K. Kashyap & Raghuram G. Rajan & Jeremy C. Stein, 2008. "Rethinking capital regulation," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 431-471.
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    Cited by:

    1. Meier, Samira & Rodriguez Gonzalez, Miguel & Kunze, Frederik, 2021. "The global financial crisis, the EMU sovereign debt crisis and international financial regulation: lessons from a systematic literature review," International Review of Law and Economics, Elsevier, vol. 65(C).
    2. Alessandro Roncaglia, 2010. "Contributions on monetary and financial issues: an introduction," PSL Quarterly Review, Economia civile, vol. 63(253), pages 99-102.

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    More about this item

    Keywords

    introduction; financial crisis; rules;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G1 - Financial Economics - - General Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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