Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track?
This note questions two emerging views on ways to tackle systemic risk. As evidenced by the explosive growth of investment banks, which were regulated more lightly because they were assumed to be systemically less important, regulatory unevenness c...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2009/10/11953775/containing-systemic-risk-regulatory-reform-proposals-right-track http://hdl.handle.net/10986/10967 |
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okr-10986-109672021-04-23T14:02:53Z Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? de la Torre, Augusto Ize, Alain ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS AGENCY PROBLEMS ARBITRAGE BALANCE SHEET BANK POLICY BANKING CRISIS BORROWER CAPITAL MARKETS COMMERCIAL BANKS DEBT DEFAULT RISK DEPOSIT DEPOSIT INSURANCE DEPOSITS DIRECT ACCESS ENTRY REQUIREMENTS FAILURE RESOLUTION FAILURE RESOLUTION FRAMEWORK FINANCIAL FLOWS FINANCIAL HISTORY FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM GLOBAL BANKING HEDGE FUNDS HOLDINGS INSTITUTIONAL INVESTORS INVESTMENT BANKS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY PRESSURE LIQUIDITY RISK MARKET FAILURES MARKET STRUCTURES MATURITY MATURITY MISMATCH MATURITY MISMATCHES PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS REGULATORY REFORM RETURN SAFETY NET SHORT MATURITY SOCIAL COSTS SYSTEMIC RISK TAX TAX CREDIT TREASURY UNINSURED DEBT UNIVERSAL BANKING WHOLESALE FUNDING WHOLESALE INVESTORS WORLD ECONOMY This note questions two emerging views on ways to tackle systemic risk. As evidenced by the explosive growth of investment banks, which were regulated more lightly because they were assumed to be systemically less important, regulatory unevenness can trigger acutely destabilizing regulatory arbitrage. Hence, unless systemic footprints can be accurately measured and updated, something we think is unlikely, regulating differentially those institutions that are deemed to be the most systemically relevant looks like a perilous return to the past. Similarly, internalizing systemic liquidity risk by taxing maturity mismatches looks like a remnant of idiosyncratic thinking. Matching short liabilities with short assets can protect an individual intermediary's liquidity but at the expense of exacerbating systemic vulnerability. 2012-08-13T13:43:15Z 2012-08-13T13:43:15Z 2009-10 http://documents.worldbank.org/curated/en/2009/10/11953775/containing-systemic-risk-regulatory-reform-proposals-right-track http://hdl.handle.net/10986/10967 English Latin America and the Caribbean Region (LCR) Crisis Briefs CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research Latin America & Caribbean |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS AGENCY PROBLEMS ARBITRAGE BALANCE SHEET BANK POLICY BANKING CRISIS BORROWER CAPITAL MARKETS COMMERCIAL BANKS DEBT DEFAULT RISK DEPOSIT DEPOSIT INSURANCE DEPOSITS DIRECT ACCESS ENTRY REQUIREMENTS FAILURE RESOLUTION FAILURE RESOLUTION FRAMEWORK FINANCIAL FLOWS FINANCIAL HISTORY FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM GLOBAL BANKING HEDGE FUNDS HOLDINGS INSTITUTIONAL INVESTORS INVESTMENT BANKS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY PRESSURE LIQUIDITY RISK MARKET FAILURES MARKET STRUCTURES MATURITY MATURITY MISMATCH MATURITY MISMATCHES PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS REGULATORY REFORM RETURN SAFETY NET SHORT MATURITY SOCIAL COSTS SYSTEMIC RISK TAX TAX CREDIT TREASURY UNINSURED DEBT UNIVERSAL BANKING WHOLESALE FUNDING WHOLESALE INVESTORS WORLD ECONOMY |
| spellingShingle |
ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS AGENCY PROBLEMS ARBITRAGE BALANCE SHEET BANK POLICY BANKING CRISIS BORROWER CAPITAL MARKETS COMMERCIAL BANKS DEBT DEFAULT RISK DEPOSIT DEPOSIT INSURANCE DEPOSITS DIRECT ACCESS ENTRY REQUIREMENTS FAILURE RESOLUTION FAILURE RESOLUTION FRAMEWORK FINANCIAL FLOWS FINANCIAL HISTORY FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM GLOBAL BANKING HEDGE FUNDS HOLDINGS INSTITUTIONAL INVESTORS INVESTMENT BANKS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY PRESSURE LIQUIDITY RISK MARKET FAILURES MARKET STRUCTURES MATURITY MATURITY MISMATCH MATURITY MISMATCHES PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS REGULATORY REFORM RETURN SAFETY NET SHORT MATURITY SOCIAL COSTS SYSTEMIC RISK TAX TAX CREDIT TREASURY UNINSURED DEBT UNIVERSAL BANKING WHOLESALE FUNDING WHOLESALE INVESTORS WORLD ECONOMY de la Torre, Augusto Ize, Alain Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? |
| geographic_facet |
Latin America & Caribbean |
| relation |
Latin America and the Caribbean Region (LCR) Crisis Briefs |
| description |
This note questions two emerging views
on ways to tackle systemic risk. As evidenced by the
explosive growth of investment banks, which were regulated
more lightly because they were assumed to be systemically
less important, regulatory unevenness can trigger acutely
destabilizing regulatory arbitrage. Hence, unless systemic
footprints can be accurately measured and updated, something
we think is unlikely, regulating differentially those
institutions that are deemed to be the most systemically
relevant looks like a perilous return to the past.
Similarly, internalizing systemic liquidity risk by taxing
maturity mismatches looks like a remnant of idiosyncratic
thinking. Matching short liabilities with short assets can
protect an individual intermediary's liquidity but at
the expense of exacerbating systemic vulnerability. |
| format |
Publications & Research :: Brief |
| author |
de la Torre, Augusto Ize, Alain |
| author_facet |
de la Torre, Augusto Ize, Alain |
| author_sort |
de la Torre, Augusto |
| title |
Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? |
| title_short |
Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? |
| title_full |
Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? |
| title_fullStr |
Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? |
| title_full_unstemmed |
Containing Systemic Risk : Are Regulatory Reform Proposals on the Right Track? |
| title_sort |
containing systemic risk : are regulatory reform proposals on the right track? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2009/10/11953775/containing-systemic-risk-regulatory-reform-proposals-right-track http://hdl.handle.net/10986/10967 |
| _version_ |
1764415033088933888 |