Keynote Address: A Regulatory Framework for Managing Systemic Risk
27 Pages Posted: 18 Oct 2011 Last revised: 28 Dec 2014
Date Written: October 24, 2011
This accessible analysis of systemic risk regulation was delivered as the keynote speech at an October 20, 2011 European Central Bank conference on regulation of financial services. Many regulatory responses, like the Dodd-Frank Act in the United States, consist largely of politically motivated reactions to the financial crisis, looking for villains (whether or not they exist). To be most effective, however, the regulation must be situated within a more analytical framework. In this speech, I attempt to build that framework, showing that preventive regulation is insufficient and that regulation also must be designed to limit the transmission of systemic risk and reduce systemic consequences.
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