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Title:The regulatory response to the financial crisis PDF Logo
Authors:Goodhart, Charles A. E.
Issue Date:2008
Series/Report no.:CESifo working paper 2257
Abstract:There are, at least, seven aspects relating to financial regulation where the recent, and still current, financial turmoil has thrown up issues for discussion. These include: 1. The scale and scope of deposit insurance; 2. Bank insolvency regimes, also known as ‘prompt corrective action’; 3. Money market operations by Central Banks; 4. Commercial bank liquidity risk management; 5. Procyclicality of capital adequacy requirements (and mark-to-market), Basel II; lack of counter-cyclical instruments; 6. Boundaries of regulation, conduits, SIVs and reputational risk; 7. Crisis management:- (a) domestic, within countries, e.g. UK Tripartite Committee; (b) cross-border; how to bear the burden of cross-border defaults? This paper describes how the current crisis has exposed regulatory failings, drawing largely on recent UK experience, and suggests what remedial action might be undertaken.
Subjects:financial regulation
bank insolvency
deposit insurance
liquidity
Basel II
procyclicality
JEL:E42
E44
G18
G28
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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