Governor Daniel K. Tarullo At the Cornell International Law Journal Symposium: The Changing Politics of Central Banks, New York, New York – February 22, 2013 – International Cooperation in Financial Regulation
Next month marks the fifth anniversary of the failure of Bear Stearns–in retrospect, the beginning of the most acute phase of the financial crisis. The cross-border dimensions of the crisis itself and the global effects of the Great Recession that followed provoked a major effort to strengthen international cooperation in financial regulation. While a good deal has already been accomplished, this evening I will suggest the next steps that would be most useful in advancing global financial stability. Of course, the fashioning of an international agenda requires a clear understanding of the overall regulatory aims of participating national authorities. Here is where international regulatory cooperation links to the subject of this conference–if not quite the changing politics of central banks, then at least their changing policy goals in the wake of the financial crisis. Almost by definition, systemic crises reveal failures across the financial system, from breakdowns in risk management at many financial firms to serious deficiencies in government regulation of financial institutions and markets. While the recent crisis was no exception, it has presented particular challenges to the policy foundations of central banks, especially those like the Federal Reserve that carry out regulatory mandates alongside their monetary policy missions.”
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