The Regulatory Cycle in Banking: What Lessons from the U.S. Experience? (From the Dodd-Frank Act to COVID-19)

77 Pages Posted: 10 Dec 2020 Last revised: 12 Dec 2020

Date Written: November 17, 2020

Abstract

This paper analyses the interactions between financial regulation and crises with reference to the experience of the United States in the period after the global financial crisis up to the COVID-19 emergency. In the last few years, a new regulatory system for large banks has arisen in the U.S., reversing some elements of the Dodd-Frank Act and introducing deviations from the international rules. This approach is also confirmed by some of the measures adopted in response to Covid-19. If this trend were to spread to other jurisdictions, the globally harmonized approach to regulation could break down. In the current exceptional circumstances as well, the international standards must not be breached, as they provide the resilience needed to sustain lending to the economy, and to keep banks safe. With the memory of the global financial crisis fading and the long post-crisis economic expansion coming to an end, the pressures to dilute the G-20 rules could grow stronger. The importance of maintaining a consistent approach to banking regulation needs to be emphasized.

Keywords: financial crises, international regulation

JEL Classification: F53, G01, G20

Suggested Citation

Trapanese, Maurizio, The Regulatory Cycle in Banking: What Lessons from the U.S. Experience? (From the Dodd-Frank Act to COVID-19) (November 17, 2020). Bank of Italy Occasional Paper No. 585, Available at SSRN: https://ssrn.com/abstract=3746215 or http://dx.doi.org/10.2139/ssrn.3746215

Maurizio Trapanese (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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