New Perspectives on Financial Stability
Publication Year: 2012
It has been four years since the financial crisis of 2008, and the global financial system still is experiencing malaise caused by high rates of unemployment; a lingering, unresolved supply of foreclosed properties; the deepening European debt crisis; and fear of a recurrence of the bank turmoil that brought about the Great Recession. All of these factors have led to stagnant economic growth worldwide.
In Rocky Times, editors Yasuyuki Fuchita, Richard J. Herring, and Robert E. Litan bring together experts from academia and the banking sector to analyze the difficult issues surrounding troubled large financial institutions in an environment of economic uncertainty and growing public anger. Continuing the format of the previous Brookings- Nomura collaborations, Rocky Times focuses largely on developments within the United States and Japan but looks at those in other nations as well.
This volume examines two broad areas: the Japanese approach to regulating financial institutions and promoting financial stability and the U.S. approach in light of the Dodd-Frank Act. Specific chapters include "Managing Systemwide Financial Crises: Some Lessons from Japan since 1990," "The Bankruptcy of Bankruptcy," "The Case for Regulating the Shadow Banking System," "Why and How to Design a Contingent Convertible Debt Requirement," and "Governance Issues for Macroprudential Policy in Advanced Economies."
Contributors: Gavin Bingham (Systemic Policy Partnership, London), Charles W. Calomiris (Columbia Business School), Douglas J. Elliott (Brookings Institution), Kei Kodachi (Nomura Institute of Capital Markets Research), Morgan Ricks (Vanderbilt Law School).
Published by: Brookings Institution Press
Table of Contents
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In 2004 the Brookings Institution partnered with the Nomura Institute of Capital Markets Research to present timely and cutting-edge research on selected topics relating to financial market structure and policy that would be of interest to policymakers, scholars, and market practitioners in the United States, Japan, and elsewhere. ...
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Recovery remains weak from the Great Recession, arguably the worst financial crisis since the Great Depression, which quickly spread from its origins in the United States to much of the rest of the world. Over-leveraged consumers have been hesitant to spend, while over-leveraged banks have been too weak to lend. ...
2. Managing Systemwide Financial Crises: Some Lessons from Japan since 1990
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Because no international resolution regime for large and complex crossborder financial firms has been established, doubts are often expressed over whether the orderly liquidation stipulated in Title II of the Dodd-Frank Act can be achieved as intended. This chapter emphasizes that pursuing orderly liquidation without using taxpayer money itself ...
3. The Bankruptcy of Bankruptcy
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A legal entity, whether a person or company, is bankrupt when it cannot make all payments due, on time and in full. A legal construct is bankrupt when it fails to achieve its political, social, or economic objectives. The thesis of this chapter is that bankruptcy as a legal device for resolving the financial condition of systemically important financial institutions ...
4. The Case for Regulating the Shadow Banking System
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The title of this chapter raises at least two questions. First, what is meant by “shadow banking”? Second, what is meant by “regulate”? Neither question has an obvious answer. This chapter uses the term “shadow banking” to refer to a specific activity: maturity transformation that takes place outside the depository banking sector. ...
5. Why and How to Design a Contingent Convertible Debt Requirement
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Although debates still rage over the causes of the financial crisis of 2007–09, one thing is clear: several of the world’s largest financial institutions— including Fannie Mae, Freddie Mac, Citigroup, UBS, AIG, Bear Stearns, Lehman Brothers, and Merrill Lynch—had amassed huge and concentrated credit and liquidity risks related to subprime mortgages ...
6. Governance Issues for Macroprudential Policy in Advanced Economies
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The recent severe financial crisis is leading policymakers around the world to adopt a new set of tools to manage their nation’s economy. Authorities may be able to cushion the blow from dangerous financial crises by using a “macroprudential” approach that fits between monetary policy for the economy as a whole ...
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Page Count: 222
Publication Year: 2012