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Central Banks, Systemic Risk and Financial Sector Structural Reform

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  • Omarova, Saule T.
  • Library, Cornell

Abstract

This chapter contribution to an edited volume examines financial sector structural reform as a critical, though largely under-appreciated to date, dimension of central banks’ post-crisis systemic risk prevention agenda. By limiting the range of permissible transactions or organizational affiliations among different types of financial firms, structural reforms alter the fundamental pattern of interconnectedness in the financial system. In that sense, the chapter argues, reforming the institutional structure of the financial industry operates as a deeper form of the currently evolving macroprudential regulation. The chapter identifies three principal models that form a continuum of potential financial sector structural reform choices and applies this conceptual framework to analysis of post-crisis structural reforms in the U.K., EU, and U.S. It further examines how deeply issues of financial industry structure are embedded in central banks’ regulatory and policy agenda and, in light of this connection, discusses potential implications of current structural reforms for central banks’ post-crisis financial stability mandate.

Suggested Citation

  • Omarova, Saule T. & Library, Cornell, 2018. "Central Banks, Systemic Risk and Financial Sector Structural Reform," LawArXiv hy8gt, Center for Open Science.
    • Handle: RePEc:osf:lawarx:hy8gt
    DOI: 10.31219/osf.io/hy8gt
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    References listed on IDEAS

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    1. Paul Tucker, 2014. "The lender of last resort and modern central banking: principles and reconstruction," BIS Papers chapters, in: Bank for International Settlements (ed.), Re-thinking the lender of last resort, volume 79, pages 10-42, Bank for International Settlements.
    2. Janet L. Yellen, 2015. "Improving the Oversight of Large Financial Institutions : a speech at the Citizens Budget Commission, New York , New York, March 3, 2015," Speech 838, Board of Governors of the Federal Reserve System (U.S.).
    3. Frank Dierick, 2004. "The supervision of mixed financial services groups in Europe," Occasional Paper Series 20, European Central Bank.
    4. Stanley Fischer, 2016. "Monetary Policy, Financial Stability, and the Zero Lower Bound," American Economic Review, American Economic Association, vol. 106(5), pages 39-42, May.
    5. Peter Conti-Brown, 2016. "The Power and Independence of the Federal Reserve," Economics Books, Princeton University Press, edition 1, number 10576.
    6. Dierick, Frank, 2004. "The supervision of mixed financial services groups in Europe," Occasional Paper Series 20, European Central Bank.
    7. Mr. Julian T Chow & Jay Surti, 2011. "Making Banks Safer: Can Volcker and Vickers Do it?," IMF Working Papers 2011/236, International Monetary Fund.
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    Cited by:

    1. Clément Fontan Fontan & Emmanuel Carré & Guillaume L'Oeillet, 2018. "Theoretical perspectives on the new era of central banking," Post-Print halshs-01866838, HAL.

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