¿Cómo deberíamos regular el capital bancario y los productos financieros? ¿Cuál es el papel de los “testamentos en vida”?

Financial regulation is normally imposed in reaction to some prior crisis, rather than founded on theoretical principle. In the past, regulation has been deployed to improve risk management practices in individual banks. This was misguided. Instead, regulation should focus first on systemic externalities (contagion) and second on consumer protection (asymmetric information). The quantification of systemic externalities is difficult. Since the costs of financial breakdown is high, a natural response is to pile extra regulation onto a set of regulated intermediaries, but this can impair their capacity to intermediate and leads onto border problems, between regulated and unregulated and between different national regulatory systems.