Doug Elliott: It’s time to start debating the lessons for financial regulation from the Coronavirus Recession..we will learn more as the crisis unfolds, but these debates will take substantial time... good to get started. Further, a clear-eyed review will help shape the continuing policy response.
Several of these lessons were actually clear before the crisis, but
were not accepted by the regulatory community, either because they did
not believe the arguments or because the necessary actions ran up
against other policy goals. For example, my paper on "Banks and the Next Recession" warned
about many of the problems described below and I wrote in other papers
about the liquidity issues. Nor, of course, was I alone in my concerns,
especially on the liquidity issues and on the ability to use buffers.
At the same time, it’s not all about concerns and weaknesses. The
biggest lesson of this crisis may simply be that the regulatory reforms
of the last decade largely worked. It’s always been my view that they
would, taken as a whole, but it’s very good news that they have.
Please note that this paper focuses on lessons learned from our
experiences. Any redesign of the financial system will also need to
focus on future issues, such as climate change and associated policy
implications and the many issues that arise around the increased role of
Big Data and machine learning.
Finally, all of these topics are complex and require much more
discussion. This paper lays out my views based on my own observations
and many discussions with officials and market participants. In the
interests of time, I do not provide proof of my assertions here. Below
is the web version, for the "Lessons In Financial Regulation" PDF version, please click here.
Oliver Wyman
© Oliver Wyman
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