Edited By David Mayes, Robert Pringle and Michael Taylor
The credit crash which began in August 2007 and turned into the most serious financial crisis in living memory has thrust the design and the conduct of financial oversight, regulation and supervision under detailed worldwide scrutiny.
As markets suffered unprecedented meltdowns and household names went bust, central bankers and supervisors were left questioning the models of financial regulation that had been built up over the last decade and a half.
This new book, Towards a New Framework for Financial Stability, presents the first collection of practitioner responses to the first great financial crisis of the 21st century.
SPECIFICATIONS
Book Size: 170 mm x 244 mm
ISBN-10: 1-902182-55-3
ISBN-13: 978-1-902182-55-1
Format: Paperback
SUMMARY
Towards a New Framework for Financial Stability brings together a world-class group of central bankers, supervisors, academics and financial-market practitioners, with first-hand experience of financial regulation, to identify how the demands placed on those charged with financial supervision have changed and to put forward practical measures to restore financial stability.
In their introduction, the editors argue that in future financial regulation should be “smarter” rather than “tougher.” This is also the theme of many of the individual chapters.
This 40-chapter book places the crisis in context by examining the development of the regulatory and supervisory regimes we have today as well as the innovation and structural shifts in the financial sector to distil the lessons from the current financial turmoil. The book offers a practical approach: showing both policy and institutional changes.
Key policy questions
• What are the implications of the subprime crisis?
• What are the lessons of Northern Rock?
• What is the way to regulate of liquidity?
• What is next for Basel II?
• What is the role of credit rating agencies?
• What is the meaning of lender of last resort?
• What is the future of the single regulator?
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TABLE OF CONTENTS
Foreword
Nout Wellink
President, the Netherlands Bank and Chairman, Basel Committee on Banking Supervision
Lessons of the Credit Crash
David G. Mayes, Robert Pringle and Michael Taylor
Advisor to the Board, Monetary Policy and Research Department, Bank of Finland; Chairman, Central Banking Publications; Advisor to the Governor, Central Bank of Bahrain
The regulatory regime and the Basel capital requirements
Charles Freeland
Former Deputy Secretary General, Basel Committee on Banking Supervision
Research in and policy for financial stability – what have we learnt?
E. Philip Davis and Dilruba Karim
Professor, Brunel University; Lecturer, Brunel University
The new banking and financial system
David T. Llewellyn
Chair, Money and Banking, Loughborough University
The development of financial regulation and supervision in Europe
Andrea Enria
Deputy Head, Regulation and Supervisory Policy, Bank of Italy
An historical perspective on the crisis
Michael D. Bordo
Professor of Economics and Director, Center for Monetary and Financial History, Rutgers University
Behind the US subprime mortgage crisis
James R. Barth, Tong Li, Triphon Phumiwasana and Glenn Yago
Milken Institute
The Northern Rock saga
David G. Mayes and Geoffrey Wood
Advisor to the Board, Monetary Policy and Research Department, Bank of Finland; Professor of Economics, Cass Business School
The challenge to EU financial regulation
Kern Alexander
Director, Research in Financial Regulation, Centre for Financial Analysis and Policy, University of Cambridge
Regulatory action and military command: a parallel
Andrew Sheng
Chief Advise, China Banking Regulatory Commission and Board Member, Qatar Financial Centre Regulatory Authority
Originate to distribute
Michael Taylor
Advisor to the Governor, Central Bank of Bahrain
Transparency, disclosure and accounting rules
John Tattersall
Chairman, Financial Services Regulatory Practice, Banking and Capital Markets Technical Forum, PricewaterhouseCoopers LLP
Large complex financial institutions: too big to manage? Too big to regulate?
Clifford Smout
Associate Partner, Deloitte's Financial Services Advisory Group
“Too big to fail” and the market turmoil of 2007 and 2008
Gary H. Stern and Ron J. Feldman
President and Chief Executive Officer, Federal Reserve Bank of Minneapolis ; Senior Vice President, Supervision, Regulation and Credit, Federal Reserve Bank of Minneapolis
Bank insolvency: the last frontier
Eva Hüpkes
Head, Regulation, Swiss Federal Banking Commission
Deposit insurance, banking resolutions and moral hazard: considerations in system design
Michael Krimminger
Special Advisor for Policy to the Chairman, Federal Deposit Insurance Corporation
Resolving cross-border bank problems
David G. Mayes
Advisor to the Board, Monetary Policy and Research Department, Bank of Finland
Key issues for regulators and supervisors
David T. Llewellyn
Chair, Money and Banking, Loughborough University
Strengthening regimes for controlling liquidity risk: some lessons from the recent turmoil
Nigel Jenkinson
Executive Director, Financial Stability, Bank of England
Devastating liquidity effects of financial regulation and marketing microstructure
Avinash D. Persaud
Chairman, Intelligence Capital Limited
Bonuses and the credit crunch
Peter Sinclair, Guy Spier and Tom Skinner
Professor of Economics, University of Birmingham; Principal, Aquamarine Capital Management LLC; Managing Partner, Redbrick Partners
Insurance harmonisation and the globalisation of financial markets
Roger Ferguson
President and Chief Executive Officer, TIAA-CREF
Hedge funds
Hadia Ibnabdeljalil, Cedric Jacquat and Imène Rahmouni-Rousseau
Research Associate, Financial Stability and Markets Division, Banque de France, Head, Financial Stability and Markets Division, Banque de France
Credit rating agencies – their role in the last crash and their regulation
Avinash Persaud
Chairman, Intelligence Capital Limited
Derivatives and systemic risk – friend or foe?
Clive Briault
Former Managing Director, Retail Markets, UK Financial Services Authority
The regulation of company and trust services providers
Richard Pratt
Former Director General, Jersey Financial Services Commission
The changing nature of systemic financial risk
Garry J. Schinasi
Advisor, Monetary and Capital Markets Department, International Monetary Fund
The lender of last resort in the safety net
David G. Mayes
Advisor to the Board, Monetary Policy and Research Department, Bank of Finland
Can market discipline be restored? Lessons from the subprime crisis
Clas Wihlborg
Chair, International Business, Argyros School of Business and Economics, Chapman University and Professor of Finance, Copenhagen Business School
Lessons for banking and market regulation in Asia
Andrew Sheng
Chief Advise, China Banking Regulatory Commission and Board Member, Qatar Financial Centre Regulatory Authority
The Spanish approach: dynamic provisioning and other tools
Santiago Fernández de Lis and Alicia García Herrero
Supervisory lessons from the market turbulence
Charles Freeland
Former Deputy Secretary General, Basel Committee on Banking Supervision
Two industry views of the market turmoil
Gillian G.H. Garcia
International Financial Consultant, Gillian G.H. Garcia Associates
The macroprudential approach to regulation and supervision: where do we stand?
Claudio Borio
Head, Research and Policy Analysis, Bank of International Settlements
Bank fragility: perception and historical evidence
George G. Kaufman
John F. Smith, Jr. Professor of Finance and Economics, Loyola University in Chicago and Co-Chair of the US Shadow Financial Regulatory Committee
Some new directions for financial stability?
C.A.E. Goodhart
Financial Markets Group, London School of Economics
Financial turbulence and structural change in wholesale banking
Ingo Walter
Seymour Milstein Professor of Finance, Corporate Governance and Ethics, Stern School of Business, New York University
The future of the single regulator model
Michael Foot
Chairman, Promontory Financial Group (UK) Ltd
The US Proposals for regulatory reform
Jeroen Kremers and Dirk Schoenmaker
Director, Economic Research, Sector Research, Government Affairs, Emerging Markets and Multilateral Organisations and Sustainability Departments, ABN AMRO; Director, European affairs, Competition and Consumer Policy, at the Dutch Ministry of Economic Affairs
The future of banking regulation and supervision in Europe
John Berrigan, Vitor Gaspar and Patrick Pearson
Head, Financial Sector Analysis Unit, DG ECFIN, European Commission; Head, Bureau of Policy Advisers, European Commission; Head, Banking and Financial Conglomerates Regulation Unit, European Commission’s Internal Market Directorate General
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REVIEW
Only rarely does one find a book where each chapter is penned by a different person yet is still highly readable, and where each contributing author is considered to be a worldwide expert on the topic covered. 'Toward a New Framework for Financial Stability' brings together the best talent that central bankers internationally have to offer.
Central Banking Publications has put together this timely and extremely relevant book on the topic of regulation and the role it can (or should) play in the areas of systemic risk, going a step further than mere conceptual ideas, it considers some of the pragmatic solutions that need to be put into action in order to make the financial world a safer place.
What this gives the reader is an unprecedented insight into the knowledge amassed over a lifelong career of the most experienced experts in the world on their individual topics, the book covers a diverse range of subjects such as the roots of the systemic crash of 07/08, the role of regulation in the past versus where it needs to go in the future, as well as the role and regulation of banks and non-bank financial intermediaries.
Some of the key policy questions covered:
• What are the implications of the sub-prime crisis?
• What are the lessons of Northern Rock?
• What is the way to regulate of liquidity?
• What is next for Basel II?
• What is the role of credit rating agencies?
• What is the meaning of lender of last resort?
• What is the future of the single regulator?
I always consider it a sign of a job well done when a layperson can read a book and not be completely lost even though the topic is specialist, Toward a New Framework for Financial Stability achieved this, it strikes a fine balance between topics economical, political and regulatory.
If you browse the chapters you will notice that the people in power are reading this too, recently Mervyn King said that institutions that were too big to fail should be broken up, shut down or nationalised, this is a view which has gained increased traction since being well covered in this work, it also looks at the dangers of credit using the 'originate to distribute' model which largely came about due to lax monetary policy and a search for yield during a liquidity glut.
While it is a daunting book to consider at 518 pages long, it would make for an excellent reference to have at hand in particular given the ongoing principles based practice in regulation, for an intermediary it will help to give you a view of the inner workings and concerns of a central bank, providing a concise overview of the issues central bankers are concentrating on, obviously these issue will ultimately bleed down to the intermediary channel and thus it is vital for the intermediary channel to understand so that as an industry we can work with the central bank to effect policy change regarding our industry.
Karl Deeter QFA, Operations Manager, Irish Mortgage Brokers
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AUTHOR BIOGRAPHY
David Mayes is an advisor to the board at the Bank of Finland and now divides his time between the bank and the Europe Institute at the University of Auckland. Robert Pringle is the founder and chairman of Central Banking Publications and the editor-in-chief of the Central Banking journal. Michael Taylor is adviser to the governor of the Central Bank of Bahrain.
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CONTRIBUTORS
The book draws on the insights of a world-class set of authors, including: Roger Ferguson (TIAA-CREF) Imene Rahmouni-Rousseau (Banque de France) Andrew Sheng (China Banking Regulatory Commission) Nout Wellink (Basel Committee on Banking Supervision) Michael Krimminger (Federal Deposit Insurance Corporation) Gary Stern and Ron Feldman (Federal Reserve Bank of Minneapolis) Andrea Enria (Bank of Italy) Avinash Persaud (Intelligence Capital) Eva Hüpkes (Swiss Federal Banking Commission) John Tattersall (PricewaterhouseCoopers) Garry Schinasi (International Monetary Fund) Kern Alexander (University of Cambridge) James Barth (Milken Institute) Claudio Borio (Bank for International Settlements) Michael Bordo (Rutgers University)
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