Financial Stability News

Flashing news about financial stability and central banking

Paul Volcker: Financial Reform: Unfinished Business

Paul Volcker held a sweeping speech the other day where he covered almost the full regulatory agenda, from Basel 3 implementation, to proprietary trading, shadow banking, money market funds, international imbalances and the “too-big-too-fail” challenge. He claims that the current mess we are inn are primarily due to divergent national economic policies and lack of international coordination. But, finance had a big role in supporting these imbalances and finally they fell over by the sheer size of their internally generated leverage. Vocker is “the grand old man” in central banking and a key G30 persona. So the speech gives a nice overview of the challenges ahead for regulatory policy, although it is short of new policy proposals.

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