Here.
The hopeless inadequacy of the Basel-centred regime for financial stability exposed by the crises of 2007-8 and, in Europe, 2011-12 must surely count as one the most abject failures of the modern international liberal order, playing its part in calling into question public allegiance to the broader system of global governance that has prevailed since World War II. Given that, notwithstanding such disappointment, the task of redesigning the international financial system was entrusted mainly to officials meeting in Basel, it behoves insiders (current and former policy makers, including me) to cast a sceptical eye over the new construct. Far from declaring ‘job done’, the need for institutional atonement and legitimacy – plus, it might be added, organisational self-interest – point towards identifying and highlighting sins of omission and commission. Those opening remarks are intended to jolt the reader. They do, however, capture the spirit in which I have approached the title of this session, “The resilience of the financial system,” albeit at the risk of overstating weaknesses given the huge improvements in the regulatory regime since 2007/08. The essay gives that issue two twists. One is to ask whether the system is as resilient as policymakers say it is (which I answer in the negative). The other is to explore what it would mean to operationalize, within a Money-Credit Constitution, recent theoretical discussions of “informationally insensitive” safe assets.
From:
Paul Tucker
The hopeless inadequacy of the Basel-centred regime for financial stability exposed by the crises of 2007-8 and, in Europe, 2011-12 must surely count as one the most abject failures of the modern international liberal order, playing its part in calling into question public allegiance to the broader system of global governance that has prevailed since World War II. Given that, notwithstanding such disappointment, the task of redesigning the international financial system was entrusted mainly to officials meeting in Basel, it behoves insiders (current and former policy makers, including me) to cast a sceptical eye over the new construct. Far from declaring ‘job done’, the need for institutional atonement and legitimacy – plus, it might be added, organisational self-interest – point towards identifying and highlighting sins of omission and commission. Those opening remarks are intended to jolt the reader. They do, however, capture the spirit in which I have approached the title of this session, “The resilience of the financial system,” albeit at the risk of overstating weaknesses given the huge improvements in the regulatory regime since 2007/08. The essay gives that issue two twists. One is to ask whether the system is as resilient as policymakers say it is (which I answer in the negative). The other is to explore what it would mean to operationalize, within a Money-Credit Constitution, recent theoretical discussions of “informationally insensitive” safe assets.
From:
Paul Tucker