Center for Financial Policy and IMF co-host “Policy Roundtable on the
Future of Financial Regulation”
Financial
regulators, policymakers, academic researchers, private sector professionals,
and IMF/World Bank country delegates gathered on April 17, 2012 to discuss the
future of financial regulation. The roundtable co-hosted by the
Center for Financial Policy at the University of Maryland’s Robert H. Smith
School of Business and the Monetary and Capital Markets Department of the
International Monetary Fund (IMF), preceded the IMF-World Bank Spring Meetings
in Washington, DC.
Christine Lagarde, Managing Director of the International Monetary Fund, opened
the roundtable with a discussion of the relationship between financial regulation
and growth and stability around the world. Ms. Lagarde spoke passionately about
financial regulation and the important need for it to be on the agenda. “We need
a more stable financial system, one that serves businesses and households rather
than destabilizes the functioning of the real economy,” she said to the event guests.
Although some progress has been made on capital and liquidity standards, Ms. Lagarde
noted that “[policymakers] still need to complete the reform agenda and ensure that
the new standards are implemented in a way that is consistent across countries.”
José Viñals, Director of the IMF’s Monetary and Capital Markets Department, followed
the Managing Director’s remarks by addressing the role IMF can play in financial
regulation.
The first panel, “Framework and Best Practices,” was moderated by Jonathan Fiechter,
Deputy Director of the Monetary and Capital Markets Department at the IMF. The panel
discussed the progress national and international policymakers made in addressing
the causes of the financial crisis since 2007. Additionally, they discussed ‘Too
Big To Fail’ institutions, resolution frameworks, macro-prudential supervision and
risks associated with shadow banking. Panelists included Nellie Liang, Director,
Office of Financial Stability Policy and Research, Federal Reserve Board; Jason
Cave, Deputy Director, Office of Complex Financial Institutions, FDIC; Russ Wermers,
Associate Professor of Finance, University of Maryland; and Stijn Claessens, Assistant
Director, Research, IMF.
Lemma Senbet, The William E. Mayer Chair Professor of Finance and Director,
Center for Financial Policy, University of Maryland, moderated the second panel,
“The Future of Financial Regulation.” The panel first discussed the movement towards
a globally coordinated regulatory framework to monitor systemically important institutions
that operate across national boundaries. Other topics included financial innovation;
Dodd-Frank’s Orderly Liquidation Authority; regulating and monitoring systemic risks
engendered by ETFs; corporate governance and executive compensation practices; and
the future of capital regulation and cost of bank equity. Panelists included Donald
Kohn, Former Vice Chairman, Federal Reserve Board and Senior Fellow, Brookings Institution;
Craig Lewis, Chief Economist and Director, Division of Risk, Strategy, and Financial
Innovation (RiskFin), US Securities and Exchange Commission; Charles Taylor, Deputy
Comptroller for Capital and Regulatory Policy, Office of the Comptroller of the
Currency; and Kathleen Hanley, Deputy Director and Deputy Chief Economist, Division
of Risk, Strategy, and Financial Innovation (RiskFin), US Securities and Exchange
Commission.
The roundtable participants enjoyed a luncheon keynote address from Darrell Duffie,
Dean Witter Distinguished Professor of Finance at Stanford University. Professor
Duffie went into the “plumbing” of the financial market, discussing the core interbank
market, central bank liquidity, central bank swap lines, broad credit facilities,
liquidity to financial market utilities, lending of last resort, and Tri-Party Repo
Infrastructure Reform. Amadou N.R. Sy, Deputy Chief of the Monetary and Capital
Markets Department at the IMF, concluded the day’s event by encouraging participants
to use the information obtained at the roundtable to help refine the agenda on financial
regulation in a forward looking manner. He also mentioned that the program coordinators
will produce a white paper as a follow-up to this roundtable.
About the Center for Financial Policy
The Center for Financial Policy leverages the Smith School’s world renowned faculty
to lead research in a collaborative exchange of ideas and solutions on critical
policy issues between business, government, and academia, while working to enhance
and broaden the exposure of the next generation of business and government leaders
to leading academics and practitioners in financial policy. For more on the center,
please visit the CFP website.
About the Monetary and Capital Markets (MCM) Department of the International
Monetary Fund
MCM’s mission is to provide intellectual leadership and expertise for the IMF’s
work on capital markets, financial sectors and monetary and foreign exchange arrangements
and operations. MCM’s surveillance role includes: identifying risks to global financial
stability and their implications for the membership; assessing the soundness of
individual members’ financial systems and their linkages with the macro-economy;
assessing the effectiveness of the authorities’ oversight of these systems; and
strengthening the Fund’s capability to provide early warning and help prevent or
mitigate financial crises. MCM supports capacity-building in member countries, particularly
with regard to the supervision and regulation of financial systems, central banking,
monetary and exchange rate regimes, and asset and liability management. In delivering
these services, MCM collaborates closely with regional and multilateral organizations
and financial sector standards-setters.
