| Systemic Risk, International Regulation, and the Limits of Coordination Contributor(s): Federal Reserve Board (Author) |
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ISBN: 1503283453 ISBN-13: 9781503283459 Publisher: Createspace Independent Publishing Platform OUR PRICE: $12.30 Product Type: Paperback Published: November 2014 |
| Additional Information |
| BISAC Categories: - Business & Economics |
| Physical Information: 0.13" H x 8.5" W x 11" (0.37 lbs) 62 pages |
| Descriptions, Reviews, Etc. |
| Publisher Description: This study examines the incentives of national regulators to coordinate regulatory policies in the presence of systemic risk in global financial markets. In a two-country and three-period model, correlated asset fire sales by banks generate systemic risk across national financial mar- kets. Relaxing regulatory standards in one country increases both the cost and the severity of crises for both countries in this framework. In the absence of coordination, independent regulators choose inefficiently low levels of macro-prudential regulation. A central regulator internalizes the systemic risk and thereby can improve the welfare of coordinating countries. Symmetric countries always benefit from coordination. Asymmetric countries choose different levels of macro-prudential regulation when they act independently. Common central regulation will voluntarily emerge only between sufficiently similar countries. |