davies68_metamorworksGetty Images_globecityfinancedigital metamorworks/Getty Images

Regulating in a Pandemic

Many regulatory changes have been introduced around the world in the last two months, understandably in haste, as national policymakers responded to the COVID-19 crisis with measures to keep credit flowing to affected economic sectors. Sadly, unlike after the 2007-09 global financial crisis, signs of international cooperation are few.

LONDON – The years after the 2007-09 global financial crisis were characterized by an orgy of rulemaking by financial regulators around the world to address the weaknesses exposed by the upheavals. Importantly, a renamed and reinforced Financial Stability Board (FSB), reporting to a series of G20 summits, oversaw the process of re-regulation.

Despite the economic impact of the measures and the complexity of making rules to suit the needs of different financial systems, a remarkable degree of consistency was achieved. While the United States had never fully implemented the Basel 2 framework, Basel 3 – featuring, for example, higher reserve requirements – found its way, in more or less recognizable form, into the rulebooks of all the different US banking regulators.

This time is different. Many regulatory changes have been introduced around the world in the last two months, understandably in haste, as national policymakers responded to the COVID-19 crisis with measures to keep credit flowing to affected economic sectors.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

or

Register for FREE to access two premium articles per month.

Register

https://prosyn.org/WXTKMBb