Central Banks, Systemic Risk and Financial Sector Structural Reform

Rosa Lastra and Peter Conti-Brown (Eds.), Research Handbook on Central Banking (Forthcoming)

Cornell Legal Studies Research Paper No. 18-04

30 Pages Posted: 15 Jan 2018

Date Written: January 10, 2018

Abstract

This chapter contribution to an edited volume examines financial sector structural reform as a critical, though largely under-appreciated to date, dimension of central banks’ post-crisis systemic risk prevention agenda. By limiting the range of permissible transactions or organizational affiliations among different types of financial firms, structural reforms alter the fundamental pattern of interconnectedness in the financial system. In that sense, the chapter argues, reforming the institutional structure of the financial industry operates as a deeper form of the currently evolving macroprudential regulation.

The chapter identifies three principal models that form a continuum of potential financial sector structural reform choices and applies this conceptual framework to analysis of post-crisis structural reforms in the U.K., EU, and U.S. It further examines how deeply issues of financial industry structure are embedded in central banks’ regulatory and policy agenda and, in light of this connection, discusses potential implications of current structural reforms for central banks’ post-crisis financial stability mandate.

Keywords: Financial Regulation, Central Banking, Federal Reserve, Financial Sector Structural Reform, Bank Structural Reform, Systemic Risk, Macroprudential Regulation, Structural Separation, Volcker Rule, Glass-Steagall, Ring-Fencing, Lender of Last Resort, Boundary Problem, Regulatory Capacity

Suggested Citation

Omarova, Saule T., Central Banks, Systemic Risk and Financial Sector Structural Reform (January 10, 2018). Rosa Lastra and Peter Conti-Brown (Eds.), Research Handbook on Central Banking (Forthcoming); Cornell Legal Studies Research Paper No. 18-04. Available at SSRN: https://ssrn.com/abstract=3099621

Saule T. Omarova (Contact Author)

Cornell University - Law School ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
267
rank
111,496
Abstract Views
777
PlumX Metrics