financial regulatory reform

Ireland’s done it. The UK’s about to do it. Now Denmark’s quite keen too.

Central bank director Nils Bernstein has said he’d like to see much closer co-operation with the Danish regulator, the FSA. ‘We can see a trend in Europe and internationally which involves some kind of fusion between central banks and financial regulatory authorities,’ he told financial daily Børsen (Danish, translation). ‘This could be advantageous for Denmark too.’ 

James Politi

After Ben Bernanke was confirmed for a second term as Fed chairman back in January, the political heat surrounding the US central bank died down a little.

But with the Fed re-establishing currency swap lines with the European Central Bank and others over the weekend to help the strains of the sovereign debt crisis, some lawmakers have ratcheted up their criticism again. 

Simone Baribeau

Washington politics seems like it may be leaving Paul Volcker, White House economics advisor, a little less upbeat. A couple weeks ago, he was “more optimistic” than he had been that a financial reform bill would pass this year. Today, at a talk to the Levy Economics Institute he said only that he was hopeful that useful structural reform will pass.

Mr Volcker criticised those in the financial community who “bitterly fighting” credit default swap regulation. They were, he said, “pushing back against what seems to be reasonable protection against the next crisis and its effects,” saying there should have been some “better” and “more expeditious way” of dealing with the problem of AIG’s CDS-fueled collapse.

The unnecessarily acrimonious CDS fight isn’t Washington’s only problem. Mr Volcker also lashed out at the politics that – 15 months after inauguration and in the midst of an economic crisis – have left the Treasury without permanent replacements for the two top finance posts: under secretary for domestic finance and under secretary for international affairs. “There is something the matter in Washington,” said Mr Volcker. 

Simone Baribeau

William C Dudly, president of the NY Fed, today outlined his concerns with the direction of financial regulatory reform. His three-fold concerns (in brief).

  1. There is no global consensus on regulatory reform. The problem, he says, is that “without harmonized standards, financial intermediation would inevitably move toward geographies and activities where the standards are more lax.” He recommended “a long phase-in period in the transition to ” new standards. “The focus should be more on the side of all ending up in the same place, rather than on the relative degree of difficulty in getting there.”