Peterson Institute for International Economics

Roubini Topic Archive: Financial Regulation

  • Is Europe Ready for Banking Union?

    Systemic fragility in the European banking sector predates the Greek fiscal crisis. It was revealed by the subprime/Lehman shock of 2007–08, and has never been properly addressed since then in spite of successive stress tests. In recent weeks, several senior policymakers have become more explicit on the need for a banking union—in other words, a […]

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  • A New Era for Global Financial Standards

    Even as headlines remain dominated by the euro area crisis, the financial world is transforming itself along multiple other dimensions. One intriguing but so far little-noticed development is the gradual shift in the role of global financial standard setters, which are becoming more assertive in looking at how their standards are adopted and implemented around […]

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  • Tax Reform and Consumption-Based Tax Systems

    Congressional testimony submitted to the US House Ways and Means Committee hearing on “Tax Reform and Consumption-based Tax Systems” July 26, 2011 This testimony draws on joint work with Peter Boone and James Kwak. Underlined text indicates links to supplementary material; please see also, where we also provide daily updates and detailed policy assessments […]

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  • Too Big to Fail: The Transatlantic Debate

    Although the United States and the European Union were both seriously impacted by the financial crisis of 2007, resulting policy debates and regulatory responses have differed considerably on the two sides of the Atlantic. In this paper the authors examine the debates on the problem posed by “too big to fail” financial institutions.

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  • The European Union Has Not Yet Solved Its Banking Problem

    The chaos that followed Lehman Brothers’ collapse two years ago hit financial systems in the United States and Europe with similar violence. But the consequences were not symmetrical. Several large financial institutions disappeared in the United States, partly because of stringent disclosure requirements, leading to immediate restructuring of the financial landscape. In the spring of 2009, public “stress tests” forced weaker banks to recapitalize, and soon the institutions at the core of the US financial system started regaining investors’ confidence, in spite of much pain still to come among smaller local banks. The United States faces major economic and social challenges, but its financial crisis appears to have essentially ended more than a year ago.

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  • A Disappointing Agreement in Basel

    Morris Goldstein says the September 12 accord in Basel on new rules for bank capital reserves falls short of the goal of safeguarding the system against future crises. Edited transcript, recorded September 13, 2010. © Peterson Institute for International Economics. Steve Weisman: Global banking regulations are again in the headlines. This is Steve Weisman at […]

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  • Europe’s Stress Tests: Not Reassuring

    Morris Goldstein finds that the stress tests announced July 23 indicate a reluctance in Europe to admit the seriousness of the banks’ difficulties.

    Steve Weisman: How reassuring have the European bank stress tests been to those concerned about the stability and health of the European banking system? This is Steve Weisman at the Peterson Institute for International Economics with Morris Goldstein of the Institute, senior fellow here who’s been looking at the stress tests that were out today, July 23. Morris, thanks for joining me.

    Morris Goldstein: Delighted to be here, Steve.

    Steve Weisman: So should we be reassured by these stress tests?

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  • The EU Stress Tests and the Experience in Spain

    In the days following publication by the European Union of the long-awaited stress tests of its banking sector, the market reaction—judged by the evolution of the euro, bank stocks, and peripheral spreads—has looked positive. This makes sense. The hundreds of pages of analysis of the impact of the stress tests have focused on individual banks, criticized the scenarios used in the stress test as overly harsh or not harsh enough, and as more or less adequate or stressful.

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  • Why the European Bank Stress Tests Are So Important

    Have we not heard it all before? The bank stress tests are not sufficiently transparent, the conditions are too soft, and nobody knows who will put up the financing for necessary recapitalization of weak banks. But after the US bank stress tests were published on May 7, 2009, the Wall Street Journal announced: “Worst-Case Capital Shortfall of $75 Billion at 10 Banks Is Less than Many Feared; Some Shares Rise on Hopes Crisis Is Easing.” A massive stock rally started that lasted for months.

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  • The Financial System: Heading for More Trouble

    Simon Johnson argues that President Obama’s proposed bank tax is a step forward but the financial system is still distorted by flawed incentives.  Steve Weisman: What does the United States do about banks and financial institutions that are believed too big to fail? This is Steve Weisman at the Peterson Institute for International Economics with […]

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