Following the financial crisis, much has been done for preventing systemic failure in the financial sector, stalling economic downturn and ensuring a recovery. However, the adequacy and appropriateness of the measures adopted remain questionable. As far as reforming the financial sector is concerned, despite a spate of proposals, agreement on the appropriate mix of policies and the progress with implementation have been limited. This section presents papers and articles that analyse the adequacy of various proposals and measures, the challenges that could arise at the time of implementation and advocate additional or alternative measures. Some of these papers also take a renewed look at the veracity of the arguments given for explaining the genesis of the crisis.
  
Further Reflections from a Reforming Indian Central Banker
Andrew Cornford (May 28, 2013)
  
The author reviews the latest book by Y.V. Reddy, titled 'Economic Policies and India's Reform Agenda New Thinking', on governance of the global financial and monetary system.
  
Capital Account Regulations and the Trading System: A compatibility review
Edited by: Kevin P. Gallagher (May 13, 2013)

This report published by Boston University's Pardee Center is the outcome of a workshop co-sponsored last June in Buenos Aires, Argentina with the Center for the Study of State and Society (CEDES) in Argentina and Global Development and Environment Institute (GDAE) at Tufts University. It validates the concerns that there may be a number of incompatibilities between the ability to regulate cross-border finance and disciplines under the World Trade Organization (WTO) and the myriad "free trade agreements" (FTAs) and bilateral investment treaties (BITs) that many nations have agreed to over the past decade and more. In general, the review found that FTAs and BITs are far more incompatible with the ability to regulate cross-border finance than is the WTO. The report offers concrete remedies to reconcile the ability to deploy capital account regulations with the trade and investment regime.

Insolvency Protection and Fairness for Greece: Implementing the Raffer Proposal
Kunibert Raffer (October 16, 2012)

The financial crisis in Greece and the 'austerity measures' being imposed on the country has lead to disastrous results for the economy. Contrary to mainstream prescriptions that seek to bailout big financial institutions at the expense of the real economy, an alternative proposal that was originally proposed by the author has gained much credence. The ''Raffer Proposal'' (also known as the Fair Transparent Arbitration Procedure (FTAP)) has been endorsed and propagated by many noteworthy economists, NGOs, and the Jubilee Movement. This article espouses the basic tenets of the Proposal and explains how it can help resolve the Greek crisis.

Society, Economic Policies, and the Financial Sector
Y.V. Reddy (July 12, 2012)

This is the Per Jacobsson Foundation Lecture 2012 delivered by the author at Basel, Switzerland. It is argued that the biggest challenge for the future of finance lies in designing governance practices that avoid the dangers of comprehensive regulatory capture. Approaches to regulation of the financial sector should continue to be national since the global environment is not necessarily favourable. In this regard, consideration of regulation, competition and ownership in the financial sector in an integrated manner, enhanced monitoring of financial market activities and the use of fiscal tools to supplement regulation could be helpful.

Using Minsky to Simplify Financial Regulation
(May 2, 2012)

The basic error in the current regulatory approach embodied in Dodd-Frank is that it does very little to limit the creation of fictitious liquidity or to redirect the creation of that liquidity for financing capital development of the system. A more expeditious method of reform that could replace Dodd-Frank would be to ask if there were any reason why the fictitious-liquidity structures that have grown up in the process of deregulation are necessary for the operation of the economy.

Further Thoughts on the GATS Rules for Banking Services
Andrew Cornford (February 22, 2012)

This paper revisits the debate among GATS commentators as to how far the GATS rules on banking accommodate prudential measures and financial sector reforms likely to constitute key elements of the post-crisis international financial regulatory architecture. Given that the extent of policy latitude for domestic regulation under GATS' prudential carve-out measure remains uncertain, the author makes a suggestion to significantly increase this scope.

Monetary Policy and Central Banking after the Crisis: The implications of rethinking macroeconomic theory
Thomas I. Palley (October 31, 2011)

In this paper, the author presents an outsider reform program that focuses on: central bank governance and independence; reshaping the economic philosophy of central banks to be more intellectually open-minded; major monetary policy reform that includes adoption of an inflation target equal to the minimum unemployment rate of inflation (MURI) and implementation of asset based reserve requirements; and regulatory reform that addresses problems of flawed incentives, excessive leverage, and maturity mismatch.

New Issue Newsletter on EU Financial reform
(July 22, 2011)

The financial costs of resolving the financial crisis that erupted in September 2008 are now taking a heavy toll on the economy, democracy and society of Greece, Ireland, Portugal and many other economies. It is time that decision makers and the financial sector change their old ways of acting and thinking before the crisis gets completely out of hand.

The new issue of the newsletter EU Financial Reform, edited by SOMO and WEED, is online.

You can view and download it as PDF-document at the WEED homepage:

http://www.weed-online.org/themen/english/4976541.html

The Great Austerity War: What caused the deficit crisis and who should pay for it?
James Crotty (June 29, 2011)
   
The author argues that the recent deficit crisis in the USA is the result of a shift from the New-Deal-based economic model of the early post-war period to today's neoliberal, free-market model, a shift initiated under Ronald Reagan and continued under the presidents who succeeded him. The new model has generated slow growth, rising inequality and rising deficits. Rising deficits in turn created demands for austerity. This crisis can be resolved by raising taxes on upper-income households and large corporations, cutting war spending, and adopting a Canadian or European style health care system and there is no need to accept austerity as is being prescribed.

Transatlantic Cooperation for Post-Crisis Financial Reform- To What End?
Aldo Caliari (June 6, 2011)
   
During the 2008-09 financial crisis, the G20 began to meet at the ''Heads of State'' level to formulate and implement emergency policy responses. Since then, the US and the European Union have been overhauling their own financial regulatory frameworks in parallel processes as well as working on regulatory frameworks in the context of G20 meetings where representatives of the US and five European governments and the EU hold seats. This study examines the question: What are the key issues regarding financial regulation on which transatlantic cooperation (or lack of it) could have an impact?


Drawing Lessons from US Financial Reform Efforts: A civil society perspective
Aldo Caliari (March 16, 2011)
   
The author analyses the Dodd-Frank Act of reforming the US financial sector from the perspective of the civil society. He studies the role played by the civil society in the wake of the financial crisis and the extent of influence it managed vis-à-vis the more powerful financial sector lobby it was up against.

Structural Reform of Systemically Important Financial Institutions: The FSB's response to too big To fail
Andrew Cornford (December 6, 2010)
   
Earlier this year, the focus was mainly on the Dodd-Frank Wall Street Reform and Consumer Protection Act of the USA. The question of how to address risks posed by Systematically Important Financial Institutions (SIFI) was one of the most contentious issues in this context. During the same period the Financial Stability Board (FSB) issued a less widely noticed document also addressing policy towards SIFIs. The author here reviews the FSB proposals in detail.

The Global Crisis and the Governance of Power in Finance
Gary A. Dymski (May 18, 2010)
   
This paper argues that resolving the global crisis of financial systems depends on recognizing and responding to the considerable, multi-dimensional power accumulated by the very financial firms whose dysfunctionality helped create that crisis in the first place. The existing rhetoric of financial regulation which focuses attention on problems of mechanism design, fails to take into account the presence and implications of systemic power in the system. But unless the debate over financial regulation is broadened, decades of sub-par growth and excessive financial exploitation lie ahead.

The Failure of Cross-border Financial Firms: New thinking in the aftermath of the financial crisis
Andrew Cornford (November 4, 2010)
   
The development of rules for handling insolvencies of financial and non-financial firms with operations in a number of countries (cross-border insolvencies) is a long-standing item on the international regulatory agenda. In this context, the author analyses the measures proposed in various reports to address the problems associated with systemically important financial institutions.

Financial Sector Regulation in Developing Countries: Reckoning after the crisis
Anis Chowdhury (February 24, 2010)
   
The global financial and economic crisis has cast serious doubts about the paradigm of market deregulation that dominated the last three decades. Although many developing countries, especially in Asia, became cautious following the Asian financial crisis, international financial institutions continued to advise developing countries to deregulate, albeit at a slower pace. However, this paper argues for re-regulating the financial sector with a view to preventing system-wide failures and fulfilling development needs. It highlights the importance of segregating different parts of the financial sector as well as controls over both deposit and lending rates, and the role of government-owned banks, especially for agriculture and SMEs.

The WTO as Barrier to Financial Regulation
Jayati Ghosh (February 8, 2010)
   
Many of the financial regulatory proposals now being considered by developed countries might not be feasible given the legally binding commitments these countries have made under GATS with respect to financial services liberalisation. Such WTO rules may therefore get ignored or GATS may require to be renegotiated, for the necessary financial sector reforms to take place.

The Perils of Paradigm Maintenance in the Face of the Crisis
Andrew Fischer (February 3, 2010)
   
This paper addresses how Keynesian narratives are being used to reconstitute an orthodox policy paradigm in the face of the current economic crisis. These processes of paradigm maintenance need to be urgently addressed if the current crisis is to be leveraged for a return to a more progressive, inclusive and developmental policy paradigm in both the North and the South. Failing this, current orthodoxies risk being reconstituted or even reinforced, and we could find ourselves soon entering a new round of development debacles similar to those of early 1980s.

No Going Back: Why we cannot restore glass-steagall's segregation of banking and finance
Jan Kregel (January 21, 2010)
   
Recently, a number of authoritative voices have called for a return to the New Deal Glass-Steagall legislation as the most appropriate response to the clear failure of the 1999 Financial Modernization Act to provide stability of the financial system. However, a clear understanding of the 1933 Banking Act, and subsequent regulatory interpretation and legislation suggest that this would be difficult, if not impossible. A new Glass-Steagall Act would have to be substantially different from the original, and some of the internal structural contradictions that led to its demise remedied.

Controlling Dangerous Financial Products through a Financial Precautionary Principle
Gerald Epstein and James Crotty (January 22, 2010)
   
High risk, opaque, and complex financial products have been among the key causes of the current economic crisis. Not only have these products helped cause the crisis but they have also made it extremely difficult to resolve. In response, a number of analysts have proposed a requirement that financial products be approved by a government regulatory authority before they can be marketed. In this paper the authors outline how a financial products regulatory authority would work.

The Theory of the Global ''Savings Glut''
Prabhat Patnaik (January 22, 2010)
   
For some time now, Mr. Ben Bernanke, Chairman of the Federal Reserve Board, has been arguing that the substantial increase in the U.S. current account deficit, the swing from moderate deficits to large surpluses in ''emerging-market countries'', and the significant decline in long-term real interest rates, since 1996, are the fall-out of a world ''savings glut''. Some, especially authors from the IMF stable, have gone further to explicitly link this ''savings glut'' to the world financial crisis. The present paper is devoted to a close examination of this ''savings glut'' theory.

Financial Innovation and System Design
Mario Tonveronachi (January 22, 2010)
   
The most relevant financial innovations have been the result of active policies pursued by public authorities, which have intrinsic to them, a specific financial design based on the freedom to create and absorb financial risks. The excesses that are considered as the main culprits of the current crisis are therefore a part of the physiology and not of the pathology of the wanted financial morphology. As a consequence, no regulatory reform can be effective without radical changes in the system design. A general outline of an alternative approach to regulation is presented.

Financial Regulation and the Lobbying Activities of the Financial Sector
Carlo Panico and Antonio Pinto (January 22, 2010)
   
The breakdown of the Bretton Woods' agreements and the oil shocks of the Seventies, the paper argues, changed the management of financial firms. Flexible exchange rates created new opportunities for financial operations while inflation and the decision of the authorities to attribute high priority to it accelerated financial innovation. These phenomena led to a progressive growth of the turnover of the financial sector, which strengthened its weight in the economy and may have favoured the introduction of legislation reducing the ability of the authorities to prevent the rise of systemic risk.

Financial and Economic Crisis in Eastern Europe
Rainer Kattel (January 22, 2010)
   
The paper argues that the foreign savings-led strategy followed by Eastern European economies created in 2000s almost a decade long carry trade of easy credit. That, among other things, transformed the domestic financial sector into largely foreign-owned universal banks with weak linkages with the domestic productive sector. While the credit and consumption boom helped gloss over deeper structural problems then, now these economies need to step up their efforts in industrial and innovation policies for paving their way out of the crisis.

Productive Incoherence in an Uncertain World: Financial governance, policy space and development after the global crisis
Ilene Grabel (January 20, 2010)
   
The current global financial crisis raises important questions for scholars of international political economy. Among the most important of these is how it is influencing various dimensions of financial governance vis-à-vis developing and transitional economies. The paper examines three related questions. How is the crisis affecting the governance and policies of the IMF; the prospects of regional alternatives to the Fund; and the policy space available to developing and transitional countries?

Global Liquidity and Financial Flows to Developing Countries: New trends in emerging markets and their implications
C.P. Chandrasekhar (January 22, 2010)
   
This paper argues that supply-side factors rather than the financing requirements of developing countries, explain the recent revival and surge in capital flows into developing countries. Financial liberalization and the globalization of finance have also resulted in changes in the financial structure. This in turn has implications for the accumulation of risk in markets where agents tend to herd. Associated with this increasing risk are changes in the business practices and motivations of financial firms that reduce the role of finance in ensuring broad-based economic growth.

Restructuring the Financial System: A synthetic presentation of an alternative approach to financial regulation
Mario Tonveronachi and Elisabetta Montanaro (January 22, 2010)
   
Rejecting the current approach to financial regulation based on a laissez faire regime on risk production and allocation, the authors advocate that regulation must contain and monitor systemic risks through a top-down approach, while the resulting morphology must be consistent with market discipline imposing bankruptcies. Apart from rules for risk containment with a sharp distinction between leveraged financial institutions, non-leveraged financial institutions and non-financial firms, the proposed new framework also covers rules for derivatives, markets, transparency, crisis resolution, multinational financial institutions as well as supervisors' powers and accountability.

New Pathways to Oligarchy: Towards a theory of oligarchic democracy
Amiya Kumar Bagchi (January 22, 2010)
   
In this paper the author argues that as recorded history has shown, any republican government could end up as an oligarchy. In addition to giving a detailed exposition of the various strands in the analysis of oligarchy, the author contends that the Indian experience will add new chapters to the emerging corpus of work on oligarchic democracy.

Some Observations on How to Deal with the Problem of ''Too big to fail/save/resolve''
Jan Kregel (January 4, 2010)
   
The current approach to the financial crisis, of resolving small and medium size banks through the FDIC while giving direct and indirect government support to the banks that are considered too large to be wound up, has created an even smaller number of even larger banks. However, there are at least three separate problems associated with bank size that suggest that this approach may not reduce the systemic risks of large financial institutions that contributed to the current crisis.

January 21, 2010.