The key regulatory reforms in the wake of the financial crisis are examined and considered in the context of how efforts to date can be improved to achieve “good regulation”. At the macro-level, the institutional design of systemic risk oversight needs to be re-focused on greater independence among committees and staff, while the conduct of macroprudential policy should be built around a clear set of rules and targets to achieve credibility and hence effective policymaking over time. Resolution mechanisms should be in place to provide a safety net for when macroprudential policy fails to halt the transmission of systemic risk, in order to protect the real economy from negative spill-over effects. Beneath this layer, more work needs to be done to achieve international coordination in the regulation of over-the-counter derivatives and to mitigate regulatory
arbitrage. Steps to increase transparency and central clearing of derivatives are positive but domestic political agendas should not obstruct global agreement.
What Does Good Regulation Look Like?
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