How much is enough? The case of the Resolution Fund in Europe

Thomas Huertas, María J Nieto, 18 March 2014

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During the crisis, individual institutions such as Hypo Real Estate required public assistance of €100 billion or more.1 So how can a European Resolution Fund of only €55 billion possibly suffice for all banks in the Eurozone?

Topics: EU institutions, Financial markets, International finance
Tags: bail-in, bank resolution, banking, European Resolution Fund, eurozone, Macroprudential policy, microprudential regulation, regulation, systemic risk

Market mechanisms for regulation: Cap-and-trade and Obamacare

Jeffrey Frankel, 27 February 2014

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Markets can fail. But market mechanisms are often the best way for governments to address such failures. This has been demonstrated in areas from air pollution, to traffic congestion, to spectrum allocation, to cigarette consumption.

Topics: Environment, Politics and economics
Tags: Cap-and-trade, environment, EU ETS, global warming, healthcare, market-based mechanisms, Obamacare, pollution, regulation

The determinants of banks’ liquidity buffers and the role of liquidity regulation

Clemens Bonner, Iman van Lelyveld, Robert Zymek, 1 November 2013

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Until recently, liquidity risk was not the main focus of banking regulators. However, the 2007–2009 crisis showed how rapidly market conditions can change, exposing severe liquidity risks for some institutions. Although capital buffers were effective in reducing liquidity stress to some extent, they were not always sufficient.

Topics: Financial markets, Microeconomic regulation
Tags: banking, disclosure, liquidity, regulation, Too big to fail, transparency

How have financial markets reacted to financial-sector reforms after the crisis?

Alexander Schäfer, Isabel Schnabel, Beatrice Weder di Mauro, 2 August 2013

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After the near-collapse of large parts of the financial system and unprecedented support measures from the public sector and central banks, the leaders of the G20 agreed on the need for a radical overhaul of the financial system.

Topics: International finance
Tags: CDS, credit default swap, Eurozone crisis, global crisis, regulation

A banking union for the Eurozone

Giovanni Dell'Ariccia, Rishi Goyal, Petya Koeva-Brooks, Thierry Tressel, 5 April 2013

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Before the crisis, the common currency and single market promoted financial integration. Banks and financial institutions operated with ease across countries; credit went where it was in demand; and portfolios became increasingly more diversified. The interbank market functioned smoothly, and monetary conditions were relatively uniform across the Eurozone.

Topics: EU institutions, EU policies
Tags: banking union, Eurozone crisis, regulation

On the causes and consequences of land use regulations

Frédéric Robert-Nicoud, Christian Hilber, 18 March 2013

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Land use regulations vary tremendously in shape and scope across space and have become more widespread and stringent over time. Although land use regulations have a long history dating back to at least the 17th century, they were initially pro-growth (McLaughin 2012). Even a century back, hardly any countries systematically regulated land use in a restrictive manner.

Topics: Industrial organisation
Tags: housing, regulation

Implementation of Basel III in the US will bring back the regulatory arbitrage problems under Basel I

Takeo Hoshi, 23 December 2012

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This column is a lead commentary in the VoxEU Debate "Banking reform: Do we know what has to be done?"

Topics: International finance
Tags: banks, Basel, Dodd-Frank, Finance, regulation

Unbundling the incumbent: Evidence from UK broadband

Mattia Nardotto, Tommaso Valletti , Frank Verboven, 25 November 2012

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Like other communication networks, broadband is seen as a main driver of economic activity and growth (Czernich et al. 2011). The potential benefits of broadband are considerable, but so are its rollout costs. Large, sunk infrastructure investments also create market power. Thus the telecom industry has traditionally been subject to some form of regulation.

Topics: Frontiers of economic research, Industrial organisation, Productivity and Innovation
Tags: broadband, internet, local exchanges, local loop unbundling, regulation

Macroeconomic adjustment and the history of crises in open economies

Joshua Aizenman, Ilan Noy, 21 November 2012

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Looking at recent banking crises, Gourinchas and Obstfeld (2012) have identified domestic-credit booms and real currency appreciation as the most significant predictors of future banking crises in both advanced and emerging economies1. An optimistic conjecture is that countries that previously experienced banking crises will tend to be more cautious.

Topics: Financial markets, Institutions and economics
Tags: Banking crisis, regulation, Too big to fail

Is light-touch regulation passé?

Lucia Dalla Pellegrina, Donato Masciandaro, 17 November 2011

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During the Great Moderation stable growth was associated with a high level of certainty with regard to the general framework in which economic agents were operating, both cyclically and structurally. At the structural level, an important role was given to improving market regulation, which was itself part of a more effective system of public governance (Kaufmann et al 2002).

Topics: Macroeconomic policy
Tags: global crisis, light-touch regulation, regulation

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