Waterloo, Canada – January 29, 2013 – International policy makers need to break their systemic complacency toward financial crises and improve their understanding of real financial links in the global economy, says a paper from The Centre for International Governance Innovation (CIGI).
In Another Fine Mess: Repairing the Governance of International Financial Regulation (CIGI Paper No. 12), CIGI Senior Fellow Pierre Siklos argues that, five years after the onset of the global financial crisis, “decision makers seemingly continue to believe that the severity of any crisis-led downturn can be divorced from its source. Instead of limiting the extent to which the financial sector is prone to crises, policy makers have opted to socialize the downside risks of a future financial crisis.”
Siklos says it is incumbent on individual nations to establish the foundation for an international regulatory architecture, with a determination for fiscal and monetary policies to work in harmony. He writes: “This includes cooperation, if not coordination, of regulatory and supervisory functions to ensure that macro-prudential policies effectively complement domestic monetary policy and provide an additional tool to implement a sound macroeconomic framework that will soften the blow from the next financial crisis.”
Siklos concludes that policy makers should adopt a more pragmatic approach to financial regulation and their expectations from it: “We should aim for less, not more, in repairing the governance of international financial regulation.”
For more information on Another Fine Mess: Repairing the Governance of International Financial Regulation, including a free PDF download, visit http://www.cigionline.org/publications/2013/1/another-fine-mess-repairing-governance-of-international-financial-regulation.
ABOUT THE AUTHOR:
Pierre Siklos, a CIGI senior fellow, is the director of the Viessmann European Research Centre at Wilfrid Laurier University, and a research associate at Australian National University’s Centre for Macroeconomic Analysis. Pierre Siklos’s research interests are in applied time series analysis and monetary policy, with a focus on inflation and financial markets.
Declan Kelly, Communications Specialist, CIGI
Tel: 519.885.2444, ext. 7356, Email: [email protected]
The Centre for International Governance Innovation (CIGI) is an independent, non-partisan think tank on international governance. Led by experienced practitioners and distinguished academics, CIGI supports research, forms networks, advances policy debate and generates ideas for multilateral governance improvements. Conducting an active agenda of research, events and publications, CIGI’s interdisciplinary work includes collaboration with policy, business and academic communities around the world. CIGI was founded in 2001 by Jim Balsillie, then co-CEO of Research In Motion (RIM), and collaborates with and gratefully acknowledges support from a number of strategic partners, in particular the Government of Canada and the Government of Ontario. For more information, please visit www.cigionline.org.