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The Shape of Regulation to Come

Author

Listed:
  • José Jorge

    (Faculdade de Economia, Universidade do Porto, cef.up)

Abstract

We identify the main changes in the global financial system over the last decade, pointing out the fragilities of the existing banking regulation. We then propose a variety of responses to the new challenges, like limiting banks’ non-core liabilities, introducing contingent capital and risk-weights that account for systemic risk, combining monetary policy with policies that promote financial stability, improving international cooperation regarding liquidity facilities, integrating regulation on deposit insurance and resolution of bank default. We point out some unexpected difficulties which threaten the reform agenda, and conclude with a warning: the business cycle matters when assessing the cost of new regulations, and imposing tighter rules that will create a credit crunch during a recession is questionable.

Suggested Citation

  • José Jorge, 2016. "The Shape of Regulation to Come," CEF.UP Working Papers 1602, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:cetedp:1602
    as

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    File URL: http://cefup.fep.up.pt/uploads/WorkingPapers/wp1602.pdf
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    References listed on IDEAS

    as
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    8. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
    9. Bruno, Valentina & Shin, Hyun Song, 2015. "Capital flows and the risk-taking channel of monetary policy," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 119-132.
    10. Samuel G. Hanson & Anil K. Kashyap & Jeremy C. Stein, 2011. "A Macroprudential Approach to Financial Regulation," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 3-28, Winter.
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    12. Hyun Song Shin, 2012. "Global Banking Glut and Loan Risk Premium," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 60(2), pages 155-192, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Keywords: Financial regulation;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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