Integrating Reform of Financial Regulation with Reform of the International Monetary System

28 Pages Posted: 15 Feb 2011

See all articles by Morris Goldstein

Morris Goldstein

Peter G. Peterson Institute for International Economics

Date Written: February 14, 2011

Abstract

This paper links reform of the international financial regulatory system with reform of the international monetary system because as this recent global crisis demonstrates so vividly, the root causes can come from both the financial and monetary spheres and they can interact in variety of dangerous ways. On the financial regulatory side, I highlight three problems: developing a better tool kit for pricking asset-price bubbles before they get too large; shooting for national minima for regulatory bank capital that are at least twice as high those recently agreed as part of Basel III; and implementing a comprehensive approach to "too-big-to-fail" financial institutions that will rein-in their past excessive risktaking. On the international monetary side, I emphasize what needs to be done to discourage "beggar-thy-neighbor" exchange rate policies, including agreeing on a graduated set of penalties for countries that refuse persistently to honor their international obligations on exchange rate policy.

Keywords: financial regulation, IMF surveillance, too-big-to-fail, asset-price bubbles

JEL Classification: F3, F33, G01, G28, G38

Suggested Citation

Goldstein, Morris, Integrating Reform of Financial Regulation with Reform of the International Monetary System (February 14, 2011). Peterson Institute for International Economics Working Paper No. 11-5, Available at SSRN: https://ssrn.com/abstract=1761662 or http://dx.doi.org/10.2139/ssrn.1761662

Morris Goldstein (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
United States

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