International Financial Regulation: Why it Still Falls Short

41 Pages Posted: 17 Aug 2020

See all articles by William Roy White

William Roy White

Organization for Economic Co-Operation and Development (OECD)

Date Written: July 25, 2020


While recent reforms are welcome in many ways, there are still significant reasons to doubt that the post-crisis tightening of international financial regulation guarantees future financial and economic stability. The most important reason is that the reforms have focused too narrowly on ensuring that an unstable financial sector will not aggravate downturns by restricting the supply of credit. More attention needs to be paid to ensuring that an overly exuberant financial system does not weaken other parts of the economy by encouraging a rapid buildup of debt during upturns. Some combination of time-varying monetary and regulatory policies (a macrofinancial stability framework) will be required to do this. In addition, many of the individual regulatory measures taken to date, both macroprudential and microprudential, have shortcomings. Their coherence as a package has also been questioned.

Keywords: Too big to fail, financial safety, financial reform, financial crises, implicit subsidies, political economy

JEL Classification: E02, E32, E42, E52, E58

Suggested Citation

White, William Roy, International Financial Regulation: Why it Still Falls Short (July 25, 2020). Institute for New Economic Thinking Working Paper Series No. 131 , Available at SSRN:

William Roy White (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775

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