Systemic Risk: What Is It, Why Is It Important, and What Can We Do About It?

12 Pages Posted: 2 Sep 2015 Last revised: 3 Sep 2015

Date Written: May 29, 2015

Abstract

Professors Calomiris and Haber paint a bleak picture – that is, historically populist political bargains over U.S. banking policy have become so entrenched that the most severe systemic crisis in memory, and accompanying Great Recession, may do little to spark effective policy reforms. Even if we realize this pessimistic prediction, however, our financial sector could more reliably fuel economic opportunity if information about risks of “systemwide failures” was more readily available. This article reviews how markets for information about not only the prospects for realizing systemic risks, but also the efficacy of regulatory efforts to mitigate those risks ex ante, might facilitate such an important improvement.

Keywords: Systemic risk, macroprudential regulation, information markets, financial stability, economic growth

JEL Classification: D78, E44, E58, G28

Suggested Citation

Falaschetti, Dino, Systemic Risk: What Is It, Why Is It Important, and What Can We Do About It? (May 29, 2015). Available at SSRN: https://ssrn.com/abstract=2653771 or http://dx.doi.org/10.2139/ssrn.2653771

Dino Falaschetti (Contact Author)

US Treasury ( email )

Office of Financial Research
Washington, DC District of Columbia 20220
United States

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