Tag Archives: Financial regulation

Cochrane for Growth

In a blog post, John Cochrane proposes step-by-step (politically unattractive) measures to increase growth:

  • Smarter (growth-oriented) regulation, in particular
  • Higher equity requirements and less short-term funding rather than complex financial regulation
  • Deregulation of health care supply
  • More cost-benefit analysis in environmental policy
  • Broad-based consumption rather than investment taxes
  • Clear separation of allocative and distributive fiscal policy
  • Focus on distortions in social programs
  • Deregulation of labor markets
  • Rational immigration rules distinguishing between permits to entry, reside, or work and citizenship
  • Less government intervention in the student loans market
  • Less protection, more free trade
  • More spending for the legal and criminal justice system
  • Etc.

Macroeconomic Policy

In a Vox column, Olivier Blanchard distills ten takeaways from an IMF conference on “Rethinking Macro Policy. Progress or Confusion?’” He lists them under the following headings:

  1. What will be the ‘new normal’?
  2. What the new normal will be matters a lot for policy design
  3. Can we hope to limit systemic financial risk?
  4. Should monetary policy go back to its old ways?
  5. Instrument rules
  6. Macroprudential tools or financial regulation
  7. Should central banks keep their independence?
  8. Little progress on the design of fiscal policy
  9. The complex effects of capital flows
  10. How much can the international monetary system be improved?

Extra-Territoriality and Financial Regulation

That’s the title of the annual conference of the Journal of Financial Regulation to be held at the Georgetown University Law Center in June.

The call for papers includes the following paragraphs which provide a nice overview:

Attempts by national regulators to give their regulatory standards extra-territorial effect beyond their own borders have become increasingly popular in fields as diverse as banking, securities and derivatives regulation. The attractiveness of extra-territorial regulation for policy-makers is obvious: in a world still reeling from the 2008 financial crisis, regulators can export policy preferences unilaterally while preventing some of the most malicious forms of regulatory arbitrage that can undermine their effectiveness.

But extraterritoriality can also generate a range of legal and even economic tradeoffs. At a most basic level, when practiced haphazardly it risks clashing with principles of public international law and the comity of nations, in particular when such regulation is enforced with public authority. Furthermore, extra-territorial rules can increase, as opposed to decrease the potential for conflicting or duplicative regulatory policies as other regulators respond in kind. This can lead to increased compliance costs for market participants that reduce liquidity and subject market participants to operational and legal risks that themselves can potentially introduce new forms of systemic risk.

The conference Extra-Territoriality and Financial Regulation, the annual conference of the new Journal of Financial Regulation, will seek to enhance our understanding of these and other important problems. More specifically, the conference will seek to explore topics including, but not limited to:

· the policy motivations for writing extra-territorial rules and the conditions for selecting this approach – this would include considerations from political economy, political science, and state organization theory;
· the advantages and the limits of extra-territorial financial regulation, with particular regard to the different current policy initiatives and their impact on both financial innovation and prudential oversight;
· the relationship between extra-territorial rules and the growing consensus on international standards and global soft law, in particular through international bodies such as the G20, the FSB, the Basel Committee, and others;
· regulatory responses in other jurisdictions, including the likelihood of retaliation or counteracting measures;
· responses by regulated market participants, in particular theoretical or empirical accounts of reactions by the financial industry to the adoption of extra-territorial standards;
· legal considerations for enforcing extra-territorial standards, possibly including problems from all of public international law, conflict of laws, and democratic accountability.