{"title":"Do Profit-sharing Investment Account Holders Provide Market Discipline in an Islamic Banking System?","authors":"O. Alaeddin, Simon Archer, R. Karim, Mohd Rasid","doi":"10.1093/JFR/FJX006","DOIUrl":"https://doi.org/10.1093/JFR/FJX006","url":null,"abstract":"","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"3 1","pages":"210-232"},"PeriodicalIF":2.6,"publicationDate":"2017-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJX006","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48655140","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Revisiting the Taper Tantrum: A Case for International Monetary Policy Coordination","authors":"K. Bagchi","doi":"10.1093/JFR/FJX003","DOIUrl":"https://doi.org/10.1093/JFR/FJX003","url":null,"abstract":"","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"3 1","pages":"280-289"},"PeriodicalIF":2.6,"publicationDate":"2017-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJX003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44092130","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Designing Virtual Currency Regulation in Japan: Lessons from the Mt Gox Case","authors":"Mai Ishikawa","doi":"10.1093/JFR/FJW015","DOIUrl":"https://doi.org/10.1093/JFR/FJW015","url":null,"abstract":"","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"3 1","pages":"125-131"},"PeriodicalIF":2.6,"publicationDate":"2017-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJW015","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44485109","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Limits of Globalizing Basel Banking Standards","authors":"Emily Jones, A. Zeitz","doi":"10.1093/JFR/FJX001","DOIUrl":"https://doi.org/10.1093/JFR/FJX001","url":null,"abstract":"","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"3 1","pages":"89-124"},"PeriodicalIF":2.6,"publicationDate":"2017-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJX001","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47191608","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the wake of the recent financial crisis, significant regulatory actions have been taken aimed at limiting risks emanating from trading in bank business models. Prominent reform proposals are the Volcker Rule in the U.S., the Vickers Report in the UK, and, based on the Liikanen proposal, the Barnier proposal in the EU. A major element of these reforms is to separate "classical" commercial banking activities from securities trading activities, notably from proprietary trading. While the reforms are at different stages of implementation, there is a strong ongoing discussion on what possible economic consequences are to be expected. The goal of this paper is to look at the alternative approaches of these reform proposals and to assess their likely consequences for bank business models, risk-taking and financial stability. Our conclusions can be summarized as follows: First, the focus on a prohibition of only proprietary trading, as envisaged in the current EU proposal, is inadequate. It does not necessarily reduce risk-taking and it likely crowds out desired trading activities, thereby negatively affecting financial stability. Second, there is potentially a better solution to limit excessive trading risk at banks in terms of potential welfare consequences: Trading separation into legally distinct or ring-fenced entities within the existing banking organizations. This kind of separation limits cross-subsidies between banking and proprietary trading and diminishes contagion risk, while still allowing for synergies across banking, non-proprietary trading and proprietary trading.
{"title":"Structural reforms in banking: The role of trading","authors":"J. Krahnen, Felix Noth, U. Schüwer","doi":"10.1093/JFR/FJW018","DOIUrl":"https://doi.org/10.1093/JFR/FJW018","url":null,"abstract":"In the wake of the recent financial crisis, significant regulatory actions have been taken aimed at limiting risks emanating from trading in bank business models. Prominent reform proposals are the Volcker Rule in the U.S., the Vickers Report in the UK, and, based on the Liikanen proposal, the Barnier proposal in the EU. A major element of these reforms is to separate \"classical\" commercial banking activities from securities trading activities, notably from proprietary trading. While the reforms are at different stages of implementation, there is a strong ongoing discussion on what possible economic consequences are to be expected. The goal of this paper is to look at the alternative approaches of these reform proposals and to assess their likely consequences for bank business models, risk-taking and financial stability. Our conclusions can be summarized as follows: First, the focus on a prohibition of only proprietary trading, as envisaged in the current EU proposal, is inadequate. It does not necessarily reduce risk-taking and it likely crowds out desired trading activities, thereby negatively affecting financial stability. Second, there is potentially a better solution to limit excessive trading risk at banks in terms of potential welfare consequences: Trading separation into legally distinct or ring-fenced entities within the existing banking organizations. This kind of separation limits cross-subsidies between banking and proprietary trading and diminishes contagion risk, while still allowing for synergies across banking, non-proprietary trading and proprietary trading.","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"3 1","pages":"66-88"},"PeriodicalIF":2.6,"publicationDate":"2017-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJW018","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48159955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The article traces, and presents a brief analysis of, the recent landmark developments in India’s monetary policy framework, including the shift of primary focus to price stability (through flexible inflation targeting) and the creation of a Monetary Policy Committee with independent experts to set the binding policy rate upon the Reserve Bank of India.
{"title":"Current Developments in India’s Monetary Policy Framework","authors":"Vishrut Kansal","doi":"10.1093/JFR/FJW010","DOIUrl":"https://doi.org/10.1093/JFR/FJW010","url":null,"abstract":"The article traces, and presents a brief analysis of, the recent landmark developments in India’s monetary policy framework, including the shift of primary focus to price stability (through flexible inflation targeting) and the creation of a Monetary Policy Committee with independent experts to set the binding policy rate upon the Reserve Bank of India.","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"2 1","pages":"283-290"},"PeriodicalIF":2.6,"publicationDate":"2016-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJW010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"61719111","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The article responds to the Bank of England’s (BoE) consultation paper of January 2016 on the systemic risk buffer for UK ring-fenced banks. It argues that, contrary to its proposed policy, the BoE should apply the highest permitted buffer rate—3 per cent of risk-weighted assets of common equity—to all large ring-fenced banks. The BoE’s reasons for lowering its estimate of optimal equity capital requirements are assessed critically.
{"title":"The Systemic Risk Buffer for UK Banks: A Response to the Bank of England’s Consultation Paper","authors":"J. Vickers","doi":"10.1093/JFR/FJW011","DOIUrl":"https://doi.org/10.1093/JFR/FJW011","url":null,"abstract":"The article responds to the Bank of England’s (BoE) consultation paper of January 2016 on the systemic risk buffer for UK ring-fenced banks. It argues that, contrary to its proposed policy, the BoE should apply the highest permitted buffer rate—3 per cent of risk-weighted assets of common equity—to all large ring-fenced banks. The BoE’s reasons for lowering its estimate of optimal equity capital requirements are assessed critically.","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"2 1","pages":"264-282"},"PeriodicalIF":2.6,"publicationDate":"2016-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJW011","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"61718686","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
S. Donald, H. Bateman, Ross P. Buckley, K. Liu, Rob Nicholls
The funds, entities, and regulators involved in the Australian superannuation industry together comprise a system that is complex and dynamic. The differentiation between roles and the distribution of responsibility amongst entities provides the system with a measure of resilience against the local failure of any one of the entities. However, the interconnections that bind and constitute the system also have the potential to transmit risks within the system, creating the potential for the impact of local failures to amplify through propagation, or in other ways to pose risks to the system as a whole. This article uses a new data set on 200 of Australia’s largest superannuation funds to map and assess those links and to identify the challenges those links pose to the scheme of prudential regulation applied to the superannuation system in Australia. It finds that the function of the entity and the legal form of the linkages, both of which are more variegated than typically occurs in banking sector transactions, crucially influences whether, and to what extent, various types of failures might be transmitted across the system. It also finds that we may be materially under-estimating the possibility that local failures in the superannuation system, which are a near certainty given the current regulatory risk appetite, will have a systemic impact. The findings have broad application across pension and institutional investment markets worldwide.
{"title":"Too connected to fail: the regulation of systemic risk within Australia’s superannuation system","authors":"S. Donald, H. Bateman, Ross P. Buckley, K. Liu, Rob Nicholls","doi":"10.1093/jfr/fjv010","DOIUrl":"https://doi.org/10.1093/jfr/fjv010","url":null,"abstract":"The funds, entities, and regulators involved in the Australian superannuation industry together comprise a system that is complex and dynamic. The differentiation between roles and the distribution of responsibility amongst entities provides the system with a measure of resilience against the local failure of any one of the entities. However, the interconnections that bind and constitute the system also have the potential to transmit risks within the system, creating the potential for the impact of local failures to amplify through propagation, or in other ways to pose risks to the system as a whole. This article uses a new data set on 200 of Australia’s largest superannuation funds to map and assess those links and to identify the challenges those links pose to the scheme of prudential regulation applied to the superannuation system in Australia. It finds that the function of the entity and the legal form of the linkages, both of which are more variegated than typically occurs in banking sector transactions, crucially influences whether, and to what extent, various types of failures might be transmitted across the system. It also finds that we may be materially under-estimating the possibility that local failures in the superannuation system, which are a near certainty given the current regulatory risk appetite, will have a systemic impact. The findings have broad application across pension and institutional investment markets worldwide.","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"2 1","pages":"56-78"},"PeriodicalIF":2.6,"publicationDate":"2016-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/jfr/fjv010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"61718345","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The design of financial supervision for the purposes of implementing anti-money laundering (AML) regulation has become essential in the agendas of governments. This AML regulation has been implemented through the creation of specialized agencies known as Financial Intelligence Units (FIUs). The establishment of FIUs was triggered by international pressures exerted by the Financial Action Task Force (FATF), which at the same time leaves any country free to choose its preferred model. A crucial question thus arises: how do the policymakers select their FIU models? The economics of AML suggests that a financial model of FIU (FFIU) should be the best choice, given its comparative informational advantages. Nevertheless, our empirical analysis of the establishment of FIUs shows a more nuanced reality: after the September 11 terrorist attack, the policymakers preferred the Law Enforcement model of Financial Intelligence Unit (LEFIU). Using a political economy framework, two possible and non-alternative explanations are offered. In order to counteract the terrorist threat, policymakers could have preferred the comparative advantages of the LEFIU model in terms of police and investigation powers. At the same time, politicians could have used September 11 just as an occasion to avoid the establishment of a FFIU with its higher risks of banking capture and/or an over-powerful financial agency.
{"title":"Designing Financial Supervision: The Puzzling Case of the FIUs against Money Laundering","authors":"D. Masciandaro, Alessio Volpicella","doi":"10.1093/JFR/FJW002","DOIUrl":"https://doi.org/10.1093/JFR/FJW002","url":null,"abstract":"The design of financial supervision for the purposes of implementing anti-money laundering (AML) regulation has become essential in the agendas of governments. This AML regulation has been implemented through the creation of specialized agencies known as Financial Intelligence Units (FIUs). The establishment of FIUs was triggered by international pressures exerted by the Financial Action Task Force (FATF), which at the same time leaves any country free to choose its preferred model. A crucial question thus arises: how do the policymakers select their FIU models? The economics of AML suggests that a financial model of FIU (FFIU) should be the best choice, given its comparative informational advantages. Nevertheless, our empirical analysis of the establishment of FIUs shows a more nuanced reality: after the September 11 terrorist attack, the policymakers preferred the Law Enforcement model of Financial Intelligence Unit (LEFIU). Using a political economy framework, two possible and non-alternative explanations are offered. In order to counteract the terrorist threat, policymakers could have preferred the comparative advantages of the LEFIU model in terms of police and investigation powers. At the same time, politicians could have used September 11 just as an occasion to avoid the establishment of a FFIU with its higher risks of banking capture and/or an over-powerful financial agency.","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"2 1","pages":"79-113"},"PeriodicalIF":2.6,"publicationDate":"2016-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJW002","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"61718461","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Within the Eurozone’s macroeconomic policy framework, fiscal policy was assigned the task of managing the level of fiscal deficits, and ensuring that the level of public debt was not too high. Within this framework, monetary policy was to stabilize the macroeconomy, wage and price setting was to ensure that countries remained sufficiently competitive in relation to each other, and financial liberalization was undertaken to enable integration of the peripheral European economies with their northern neighbours, thereby generating an increase in well-being. But, even before the onset of the global financial crisis, the competitive position of the GIIPS countries had become unsustainable, and financial liberalization had been grossly mismanaged. The onset of the global financial crisis has meant that interest rates have reached the zero bound so that monetary policy is no longer able to stabilize the Eurozone economy effectively. In these circumstances, fiscal policy needs to both help stabilize the economy, in a way not allowed by the Stability and Growth Pact, and also needs to play a part in ensuring the resolution of imbalances within Europe. For this to be possible, some of the sovereign debt of countries will need to be written down.
在欧元区宏观经济政策框架内，财政政策的任务是管理财政赤字水平，并确保公共债务水平不过高。在这一框架内，货币政策是为了稳定宏观经济，工资和价格的制定是为了确保各国在相互之间保持足够的竞争力，实行金融自由化是为了使欧洲外围经济体能够与其北部邻国一体化，从而增加福利。但是，即使在全球金融危机爆发之前，gips国家的竞争地位已经变得不可持续，金融自由化管理严重不善。全球金融危机的爆发意味着利率已经接近于零，因此货币政策不再能够有效地稳定欧元区经济。在这种情况下，财政政策既需要以《稳定与增长公约》(Stability and Growth Pact)不允许的方式帮助稳定经济，也需要在确保解决欧洲内部失衡方面发挥作用。要做到这一点，就需要减记一些国家的主权债务。
{"title":"Fiscal Governance: How Can the Eurozone Get What It Needs?","authors":"D. Vines","doi":"10.1093/JFR/FJW003","DOIUrl":"https://doi.org/10.1093/JFR/FJW003","url":null,"abstract":"Within the Eurozone’s macroeconomic policy framework, fiscal policy was assigned the task of managing the level of fiscal deficits, and ensuring that the level of public debt was not too high. Within this framework, monetary policy was to stabilize the macroeconomy, wage and price setting was to ensure that countries remained sufficiently competitive in relation to each other, and financial liberalization was undertaken to enable integration of the peripheral European economies with their northern neighbours, thereby generating an increase in well-being. But, even before the onset of the global financial crisis, the competitive position of the GIIPS countries had become unsustainable, and financial liberalization had been grossly mismanaged. The onset of the global financial crisis has meant that interest rates have reached the zero bound so that monetary policy is no longer able to stabilize the Eurozone economy effectively. In these circumstances, fiscal policy needs to both help stabilize the economy, in a way not allowed by the Stability and Growth Pact, and also needs to play a part in ensuring the resolution of imbalances within Europe. For this to be possible, some of the sovereign debt of countries will need to be written down.","PeriodicalId":42830,"journal":{"name":"Journal of Financial Regulation","volume":"2 1","pages":"114-129"},"PeriodicalIF":2.6,"publicationDate":"2016-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JFR/FJW003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"61718787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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