Sound at last? Assessing a decade of financial regulation | 20 June 2019

Bruegel event recordings

Bruegel, the Centre for Economic Policy Research, and the European Center for Advanced Research in Economics and Statistics co-hosted this event about the aftermath of the 2008 economic crisis. The legacy of the crisis is stronger and better capitalized banks, as well as regulators and supervisors with increased clout who pay more attention to systemic risk. However, the crisis has also left us with high leverage in advanced economies, especially in terms of sovereign dept over GDP. At the same time, interest rates are at very low levels. All of this, together with the digital disruption of the sector, poses formidable challenges for the banking industry. This event featured the first report in the IESE/CEPR Future of Banking series report, tackling three important areas of post-crisis regulatory reform: Basel III and its aftermath; resolution procedures to end ‘too big to fail’; and expanding the role of central banks with a financial stability remit. The report presents an extensive analysis of the banking sector and the regulatory reforms put in place since the crisis. At this event, several central messages of the report were discussed: - Narrow banking is not the answer to the fragility of the financial system. - Regulation should be fine-tuned: there are improvements on all fronts but no framework exists yet to deal with shadow banking and the new digital competitors. - Prudential regulation should take a holistic approach, considering and setting requirements for capital, liquidity and disclosure together and taking into account their potential interactions.