The Need for Regulatory Reform
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It would be difficult to find a professional economist who believes that a set of regulatory reforms can be drawn up that would put an end to U.S. financial crises. Crises appear to be endemic to capitalistic systems in which innovation is strongly rewarded and calculated risk-taking is an essential ingredient. Most students of the subject believe, however, that a carefully designed set of reforms focused on correcting numerous socially perverse incentives would reduce the frequency and severity of future crises.
KeywordsFederal Reserve Hedge Fund Credit Default Swap Capital Requirement Investment Bank
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