Abstract
Chapter 1 points to the limits of surveillance by international organizations, even when the surveillance is well done. It calls attention, in particular, to three forces which will be at work regardless of however much the institutions improve their own analysis and oversight1:
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limits that governments impose on surveillance by international institutions in their “shareholding” capacity, as well as self-restraint by the institutions (“sanitization”, self-censorship);
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the reluctance of elected governments to face up to the implications of warnings and alerts if this would be politically unattractive;
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the failure of markets to discipline policies that permit macroeconomic, fiscal or financial imbalances due, at least in part, to poor assessments of available information, including “sanitized” surveillance reports.
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Notes
See, for example, C.A.E. Goodhart, A. Kashyap, D. Tsomocos and A. Vardoulakis, “An Integrated Framework for Multiple Financial Regulations”, presented at the Federal Reserve System and Journal of Central Banking Conference on Central Banking: Before, During and After the Crisis, 23–24 March 2012; and A. Large, “What Framework is Best for Systemic (Macroprudential) Policy?”, Chapter 7 in The Future of Finance And the Theory that Underpins it, Centre for Economic Performance, London School of Economics.
See A. Blundell-Wignall and P. Atkinson, “The Sub-prime Crisis: Causal Distortions and Regulatory Reform”, in Bloxham, P. and C. Kent, Lessons from the Financial Turmoil of 2007 and 2008, Reserve Bank of Australia, Sydney, 2008; “What will Basel III Achieve?”, German Marshall Fund of the United States and Groupe d’Economie Mondiale de Sciences Po, 2010; “Global SIFIs, Derivatives and Financial Stability”, Financial Market Trends, OECD, Paris, 2011 No. 1; “The Business Models of Large Interconnected Banks and the Lessons of the Financial Crisis”, National Institute Economic Review No. 221, NIESR, London, July 2012. An important related paper is that of A. Blundell-Wignall and C. Roulet, “Business Models of Banks, Leverage and the Distance-to-Default”, Financial Market Trends, OECD, Paris, 2012 No. 2.
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© 2014 Paul E. Atkinson
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Atkinson, P.E. (2014). Beyond Surveillance: Reducing the Risk of Financial Crises. In: Shigehara, K. (eds) The Limits of Surveillance and Financial Market Failure. Palgrave Macmillan, London. https://doi.org/10.1057/9781137471475_5
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DOI: https://doi.org/10.1057/9781137471475_5
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