The Robert H. Smith School of Business recently co-hosted a Washington D.C. gathering of about 70 senior policymakers and banking executives for a discussion of key issues relating to enhancing systemic risk awareness, harmonization and integration in global systemic risk regulation.
The Bretton Woods Committee and Deloitte partnered with Smith in the July 26 event titled "Navigating transformational change of the global financial landscape: Realizing systemic stability, avoiding unintended consequences.”
Participants reviewed and discussed a recent study—"Global Systemic Risk Regulation since the Financial Crisis: A framework for understanding the effectiveness, impacts, and harmonization of macroprudential regulation"--by Smith Executive-in-Residence and Tyser Teaching Fellow Cliff Rossi.
“The financial crisis of 2008-2009 sparked massive global legislative and regulatory responses to address perceived market and regulatory failures responsible for setting the crisis in motion," Rossi said. “Few corners of the financial sector have been left unaffected by these regulatory efforts. Strengthening both the oversight of individual institutions (microprudential supervision) and the entire financial system (macroprudential supervision) are major objectives of global regulatory reform efforts.”
Rossi said the challenge for policymakers and practitioners in light of the magnitude of financial regulatory efforts is to:
- Understand the effectiveness of specific regulations balanced against the need to maximize long-term social welfare and firm value.
- Understand the collective impact of regulation on firms and financial markets.
- Assess the need for and the degree of harmonization of regulatory efforts globally.
Rossi said his study significantly contributes to the ongoing regulatory discussion by providing a framework for policymakers and practitioners to assess the effectiveness of these regulatory efforts and the potential for harmonization of reforms across various jurisdictions. “In this regard, the value of this work lies in the concepts and themes that attempt to bring greater clarity to the vast amount of financial regulation established since the financial crisis,” he said. “Specifically, the study establishes a set of focus areas for cataloging various regulatory efforts; outlines a set of broad criteria for assessing the effectiveness of regulation; provides a mapping of specific regulations to each focus area and a high level framework to assess regulatory impacts.”
The conference also featured presentations by Citigroup Vice Chairman Michael Helfer and Treasury Undersecretary for Domestic Finance Mary Miller.