Hardback
Stability of the Financial System
Illusion or Feasible Concept?
9781782547839 Edward Elgar Publishing
In the aftermath of the financial crisis, new financial market regulation is being implemented, and increasing numbers of countries are establishing new legislation for macroprudential oversight. Against this backdrop, this thought provoking book provides a platform for the leading international experts to discuss and encourage future debate on financial stability.
More Information
Critical Acclaim
Contributors
Contents
More Information
In the aftermath of the financial crisis, new financial market regulation is being implemented, and increasing numbers of countries are establishing new legislation for macroprudential oversight. Against this backdrop, this thought provoking book provides a platform for the leading international experts to discuss and encourage future debate on financial stability.
The breadth and scope of the issues addressed reflect the challenge of developing and consistently implementing a coherent set of financial reforms to promote financial stability. The book advocates the development of financial reforms that are effective in striking the optimal balance between realizing the enormous benefits of efficient financial intermediation, capital allocation and risk management on the one hand, and controlling systemic risks and maintaining financial stability on the other.
Making an important contribution to deepening our understanding of the many facets of financial stability, this book will prove a challenging read for policy makers, regulators and central bankers as well as for researchers and scholars in the fields of economics, money, finance and banking.
The breadth and scope of the issues addressed reflect the challenge of developing and consistently implementing a coherent set of financial reforms to promote financial stability. The book advocates the development of financial reforms that are effective in striking the optimal balance between realizing the enormous benefits of efficient financial intermediation, capital allocation and risk management on the one hand, and controlling systemic risks and maintaining financial stability on the other.
Making an important contribution to deepening our understanding of the many facets of financial stability, this book will prove a challenging read for policy makers, regulators and central bankers as well as for researchers and scholars in the fields of economics, money, finance and banking.
Critical Acclaim
‘[the book] addresses the stability of the entire financial system and does so exceptionally well. It is a critical analysis and a treasure trove of specialist information and analytical viewpoints for the subject matter expert.’
– Banking & Finance Law Review
‘With its comprehensive list of topics addressed by an eminent line-up of authors on an impressive 550 pages (including introductory pages and a brief index), this book indeed goes a long way towards shedding light on the difficult question to what extent, and how, stability of the financial system can realistically be achieved.’
– Ernest Gnan, SUERF
‘There was a world BC (Before Crisis) and there will be a world AD (After Deleveraging) – the challenge is to create an effective, efficient yet stable and sustainable financial system for this “new world”. This book provides the most comprehensive and thought-provoking basis for action I have seen so far.’
– Paul Achleitner, Chair of Supervisory Board Deutsche Bank AG
‘The financial crisis demonstrated conclusively that for central bankers and other policymakers financial stability must always be of paramount concern, for without it the macroeconomy will perform badly and monetary policy will lose its effectiveness. This book underscores the importance of financial stability, laying out the key issues and what must be done to avoid such disasters in the future.’
– William C. Dudley, President of the Federal Reserve Bank of New York, US
‘Since 2008, financial stability has moved to the center of the policy stage. This volume, combining contributions from leading policy makers and academics, is the essential introduction to the issues. Must reading.’
– Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley, US
‘Financial stability is an overarching goal. In open and democratic societies, ensuring financial stability is a matter of interest not only to central bankers, academics and financial market players, but also to all well-informed citizens. This book provides an excellent basis for a wide-ranging and rewarding debate.’
– Thomas J. Jordan, Chairman of the Governing Board of the Swiss National Bank
‘Financial stability is necessary. To achieve this common target an on-going dialogue is required between industry, policymakers, academia and other relevant stakeholders. This book provides a welcome and refreshing perspective from different standpoints on the issues at stake, and reminds us of the remaining work ahead.’
– Axel Weber, Chair of Supervisory Board, UBS
– Banking & Finance Law Review
‘With its comprehensive list of topics addressed by an eminent line-up of authors on an impressive 550 pages (including introductory pages and a brief index), this book indeed goes a long way towards shedding light on the difficult question to what extent, and how, stability of the financial system can realistically be achieved.’
– Ernest Gnan, SUERF
‘There was a world BC (Before Crisis) and there will be a world AD (After Deleveraging) – the challenge is to create an effective, efficient yet stable and sustainable financial system for this “new world”. This book provides the most comprehensive and thought-provoking basis for action I have seen so far.’
– Paul Achleitner, Chair of Supervisory Board Deutsche Bank AG
‘The financial crisis demonstrated conclusively that for central bankers and other policymakers financial stability must always be of paramount concern, for without it the macroeconomy will perform badly and monetary policy will lose its effectiveness. This book underscores the importance of financial stability, laying out the key issues and what must be done to avoid such disasters in the future.’
– William C. Dudley, President of the Federal Reserve Bank of New York, US
‘Since 2008, financial stability has moved to the center of the policy stage. This volume, combining contributions from leading policy makers and academics, is the essential introduction to the issues. Must reading.’
– Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley, US
‘Financial stability is an overarching goal. In open and democratic societies, ensuring financial stability is a matter of interest not only to central bankers, academics and financial market players, but also to all well-informed citizens. This book provides an excellent basis for a wide-ranging and rewarding debate.’
– Thomas J. Jordan, Chairman of the Governing Board of the Swiss National Bank
‘Financial stability is necessary. To achieve this common target an on-going dialogue is required between industry, policymakers, academia and other relevant stakeholders. This book provides a welcome and refreshing perspective from different standpoints on the issues at stake, and reminds us of the remaining work ahead.’
– Axel Weber, Chair of Supervisory Board, UBS
Contributors
Contributors: P. Angelini, L. Bini Smaghi, M. Blessing, C.M. Buch, M.C. Burda, J.M. Campa Fernández, M. Carney, J. Caruana, A. Dombret, W.P. Gaglianone, P.M. Hildebrand, V. Hofstätter, A. Ittner, K.H.W. Knot, U. Körner, C. Lagarde, J.-P. Landau, S. Lautenschläger, D.T. Llewellyn, O. Lucius, Y. Mersch, H. Nakaso, S. Nicoletti-Altimari, E. Nowotny, L.A. Pereira da Silva, W. Rothensteiner, A. Soares Sales, N. Sheets, P. Tucker, G. Tumpel-Gugerell, H. van Voorden, I. Visco
Contents
Contents:
Preface
Stability of the Financial System – An Introduction
Mark Carney
PART I: ABOUT FINANCIAL STABILITY
1. Financial and Fiscal Stability Beyond the Crisis Years: Two Paradigm Shifts and their Consequences
Martin Blessing
2. Criteria for Financial Stability – The European View
Andreas Dombret
3. Criteria for Financial Stability – A US View
Nathan Sheets
4. Financial Stability in Brazil
Luiz Awazu Pereira da Silva, Adriana Soares Sales and Wagner Piazza Gaglianone
5. From the Stability Pact to ESM – What Next?
Claudia M. Buch
6. Economic Convergence – The Need for Economic Cooperation and Coordination
Walter Rothensteiner and Valentin Hofstätter
7. Banking System and Financial Stability
Andreas Ittner
8. Competition, the Pressure for Returns, and Stability
Paul Tucker
9. Measuring Systemic Risk
Jaime Caruana
PART II: THE CONSEQUENCES OF FINANCIAL INSTABILITY
10. Sovereign Risk
Lorenzo Bini Smaghi
11. Default of Systemically Important Financial Intermediaries: Short-Term Stability vs. Incentive Compatibility
Yves Mersch
12. Systemically Important Banks – Possible Options for Policy Makers
Klaas H.W. Knot and Hanne van Voorden
13. A Paradigm Shift: Resolution of Banks
Jean-Pierre Landau
14. Consequences of Financial Shocks for the Real Economy
Hiroshi Nakaso
PART III: PREVENTION OF FINANCIAL INSTABILITY
15. The Economics of Financial Regulation
Ewald Nowotny
16. A Strategic Approach to Post Crisis Regulation – The Need for Pillar 4
David T. Llewellyn
17. Regulation of Banks and the ‘Level Playing Field’ – The Case of Shadow Banking
Otto Lucius
18. Enhancing Financial Stability – A Global Bank’s Perspective
Ulrich Körner
19. Stable Liquidity and Funding Flows
José Manuel Campa Fernández
20. How to Avoid Contagion and Spillover Effects in the Euro Zone?
Michael C. Burda
21. The New European Supervisory System – Harmonisation and Macroprudential Oversight
Sabine Lautenschläger
22. Macroprudential, Microprudential and Monetary Policies: Conflicts, Complementarities and Trade-Offs
Paolo Angelini, Sergio Nicoletti-Altimari and Ignazio Visco
23. Why Central Banks need a Macroeconomic Toolkit
Philipp M. Hildebrand
24. Lender of Last Resort – Which Institution Could Best Fulfil this Function?
Gertrude Tumpel-Gugerell
Stability of the Financial System: Illusion or Feasible Concept? An Epilogue
Christine Lagarde
Index
Preface
Stability of the Financial System – An Introduction
Mark Carney
PART I: ABOUT FINANCIAL STABILITY
1. Financial and Fiscal Stability Beyond the Crisis Years: Two Paradigm Shifts and their Consequences
Martin Blessing
2. Criteria for Financial Stability – The European View
Andreas Dombret
3. Criteria for Financial Stability – A US View
Nathan Sheets
4. Financial Stability in Brazil
Luiz Awazu Pereira da Silva, Adriana Soares Sales and Wagner Piazza Gaglianone
5. From the Stability Pact to ESM – What Next?
Claudia M. Buch
6. Economic Convergence – The Need for Economic Cooperation and Coordination
Walter Rothensteiner and Valentin Hofstätter
7. Banking System and Financial Stability
Andreas Ittner
8. Competition, the Pressure for Returns, and Stability
Paul Tucker
9. Measuring Systemic Risk
Jaime Caruana
PART II: THE CONSEQUENCES OF FINANCIAL INSTABILITY
10. Sovereign Risk
Lorenzo Bini Smaghi
11. Default of Systemically Important Financial Intermediaries: Short-Term Stability vs. Incentive Compatibility
Yves Mersch
12. Systemically Important Banks – Possible Options for Policy Makers
Klaas H.W. Knot and Hanne van Voorden
13. A Paradigm Shift: Resolution of Banks
Jean-Pierre Landau
14. Consequences of Financial Shocks for the Real Economy
Hiroshi Nakaso
PART III: PREVENTION OF FINANCIAL INSTABILITY
15. The Economics of Financial Regulation
Ewald Nowotny
16. A Strategic Approach to Post Crisis Regulation – The Need for Pillar 4
David T. Llewellyn
17. Regulation of Banks and the ‘Level Playing Field’ – The Case of Shadow Banking
Otto Lucius
18. Enhancing Financial Stability – A Global Bank’s Perspective
Ulrich Körner
19. Stable Liquidity and Funding Flows
José Manuel Campa Fernández
20. How to Avoid Contagion and Spillover Effects in the Euro Zone?
Michael C. Burda
21. The New European Supervisory System – Harmonisation and Macroprudential Oversight
Sabine Lautenschläger
22. Macroprudential, Microprudential and Monetary Policies: Conflicts, Complementarities and Trade-Offs
Paolo Angelini, Sergio Nicoletti-Altimari and Ignazio Visco
23. Why Central Banks need a Macroeconomic Toolkit
Philipp M. Hildebrand
24. Lender of Last Resort – Which Institution Could Best Fulfil this Function?
Gertrude Tumpel-Gugerell
Stability of the Financial System: Illusion or Feasible Concept? An Epilogue
Christine Lagarde
Index
