EU financial regulation must curb food speculation
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The Costs of Curbing Speculation: Evidence from the
Severe economic distress that provokes regulators to curb speculation by financial institutions may have unintended costs for non-financial firms In 1936 the Comptroller of the Currency unexpectedly announced just such a regulation stating that supervised banks were no longer eligible to purchase securities rated below “investment grade” |
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EU financial regulation must curb food speculation
parliamentarians to use the opportunity of the review of the EU Markets in Financial Instruments Directive (MiFID) and the new respective regulation (MiFIR) to curb financial speculation in food and other commodity derivatives markets Specifically we are calling for: 1 Strict position limits to prevent speculation from driving up prices |
Is financial regulation too complex?
Specifically, regulation may become too complex, focus too little on macroprudential risks, be inadequate to deal with crises in global financial institutions, or fail to cope with financial innovation. The recent financial crises have led to a wave of new financial regulation. Some of this regulation incorporates the lessons of the past few years.
Does regulation create financial stability?
Regulations, particularly macroprudential regulations, represent one way to try to deal with this type of systemic risk and create financial stability. However, a whole range of other kinds of intervention in addition to regulation are necessary. Regulation alone is not sufficient to create financial stability.
How effective are regulations in limiting financial instability?
The more comprehensive the relevant regulations (and the more effective they therefore are in limiting financial instability), the more certain one can be that the growth of credit to the private sector would be constrained. Less financial instability would be attained at the cost of less financial depth and development.
How do capital requirements affect liquidity regulation?
Finally, while capital requirements are mostly intended to preserve financial stability in the long run, they may also represent a form of loss absorption in the short run and thus interact with liquidity regulation in important ways.
Capital Requirements
Capital helps alleviate the three basic sources of fragility in the banking system: coordination failure among depositors and creditors and possible panics leading to liquidity and ultimately solvency crises, moral hazard and the resulting incentives to take aggressive risks resulting in solvency problems, and interbank connections and contagion ef
Liquidity Regulation
Liquidity regulation is a new dimension to regulation that has been introduced following recent crises. Although there is practically no academic literature so far on the effects of liquidity regulation and its interrelation with capital regulation, it is plausible to argue that it will help mitigate the problem of fire sales, because banks will ha
Bank Resolution and Cross-Border Regulatory Cooperation
The lack of effective bank resolution frameworks was one major impediment to intervention when financial institutions were in danger of failing during the recent financial crisis. This left most countries with the option to either bail out, or close and liquidate, banks through the corporate insolvency process. This problem was particularly acute f
Activity Restrictions and Regulatory Perimeter
The recent crises have revived the debate on which activities are appropriate for a commercial bank that benefits from the financial safety net (and thus ultimately a public back-stop guarantee) and which are not (Boot and Ratnovski 2016). The crisis has also revealed gaps in the regulatory perimeter, as risk has been shifted from regulated banks t
The Challenges
While the regulatory reforms enacted so far are clearly addressing important problems, the crisis and post-crisis years have provided new challenges for constructing an appropriate regulatory architecture. One of the key lessons from the last crisis has been that the regulation of the financial system should take an integrative approach, and consid
Looking Forward
What have we learned since the onset of the Global Crisis about how to cope with these challenges? We drew four general conclusions. 1. As the financial system gets more and more complex and sophisticated, there is a tendency to make regulation also more complex too. This may backfire. First, increasing the complexity of the financial regulation ma
References
Allen, F, T Beck, E Carletti, P Lane, D Schoenmaker and W Wagner (2011), Cross-Border Banking in Europe: Implications for Financial Stability and Macroeconomic Policies, CEPR Press. Beck, T, E Carletti and I Goldstein (2016), "Financial Regulation in Europe: Foundations and Challenges", in Matyas, Laszlo et al. (eds), Economics without Borders, Cam
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Special Food Law Issue
L'évaluation des risues des aliments étant à la base des services officiels de contrle sanitaire 39 The Notion of Dangerous Food in Europe - A Recent Alert |
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