Reinventing Financial Regulation

1. Front Matter

   Pages i-xii

   PDF

2. Reinventing Financial Regulation

   • Avinash D. Persaud

   Pages 1-6

3. Why Do We Regulate Finance?

   • Avinash D. Persaud

   Pages 7-23

4. What Causes Financial Crashes

   • Avinash D. Persaud

   Pages 25-37

5. Why Taxpayers Need to Be on the Hook

   • Avinash D. Persaud

   Pages 39-53

6. How Should We Regulate the Financial System?

   • Avinash D. Persaud

   Pages 55-75

7. Putting the New Framework to the Test

   • Avinash D. Persaud

   Pages 77-92

8. Protecting Consumers

   • Avinash D. Persaud

   Pages 93-112

9. How Accounting, Credit, and Risk Standards Create Risk

   • Avinash D. Persaud

   Pages 113-136

10. What to Do About Complex Financial Instruments

    • Avinash D. Persaud

    Pages 137-150

11. Bankers’ Pay

    • Avinash D. Persaud

    Pages 151-162

12. Why Locking Them Up Will Not Work

    • Avinash D. Persaud

    Pages 163-173

13. Financial Transaction Taxes

    • Avinash D. Persaud

    Pages 175-200

14. The Shape of Financial Regulation

    • Avinash D. Persaud

    Pages 201-213

15. The Locus of International Financial Regulation

    • Avinash D. Persaud

    Pages 215-233

16. Sending the Herd Off the Cliff Edge

    • Avinash D. Persaud

    Pages 235-246

17. Banks Put Themselves at Risk at Basel

    • Avinash D. Persaud

    Pages 247-249

18. Back Matter

    Pages 251-259

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Reinventing Financial Regulation offers an analysis of the fundamental flaws that plague the current system of financial regulation, one built around ideas of "risk-sensitivity" and "capital adequacy." Author Avinash Persaud argues that while some sensible reforms have been introduced, a fresh approach—centered on risk capacity—is required. When the entire regime is compromised, simply slapping bandages on each new wound will do nothing to cure the underlying disease.

Reinventing Financial Regulation goes beyond an urgent call to fix our profoundly troubled and damaged financial markets. It is a blueprint for an effective financial regulation system that could very well save the future of finance.

What would a well-regulated financial system look like? Until now, policymakers, financial experts, and leading academics have been content to avoid facing this question head–on. We have been offered piecemeal reforms that ultimately leave the global financial system exposed to different versions of the same risks that so recently brought it to its knees. The world economy literally cannot afford to dodge this question any longer.

Persaud's goal to bring clarity and a powerful simplicity to the financial regulation process results in a systematic and apolitical framework for fixing the world's fractured financial industry and transforming its regulation—not just for today's financial climate, but once and for all.

Avinash D. Persaud's career spans finance, academia, and public policy. He is currently Chairman of Intelligence Capital, a London-based financial consultancy; Chairman of Elara Capital, an emerging market investment firm based in London and Mumbai; and Chairman of Paradise Beach, the company developing Four Seasons Barbados. Previously, he served as managing director at State Street Corporation; global head of currency and commodity research at JP Morgan; and director of fixed income research at UBS. His analytical innovations led him to be ranked as one of the top three currency analysts in global investor surveys for over a decade. According to the Financial Times, his work on investors' shifting appetite for risk "has entered the popular lexicon of analysts." Mr. Persaud was formerly Chairman of the Warwick Commission on Financial Reform; Chairman of the regulatory subcommittee of the UN High-Level Task Force on Financial Reform;Co-Chair of the OECD Emerging Markets Network; Member of the UK Government's Audit and Risk Committee; Member of the Intergovernmental Task Force on Financial Taxes; and Member of the Pew Task Force to the U.S. Senate Banking Committee. He is Emeritus Professor at Gresham College; Senior Fellow at London Business School; Visiting Fellow at the Centre for Financial Analysis & Policy at Cambridge Judge Business School; 2010 President of the British Association for the Advancement of Science (Section F); and former Governor to the London School of Economics. He was Visiting Scholar at both the IMF and ECB and was a founding director of the 90,000-strong Global Association of Risk Professionals. In 2000, he won the Jacques de Larosiere Prize in Global Finance from the Institute of International Finance, and he was recently ranked as the No. 2 public intellectual in the world on the financial crisis by an expert panel for Prospect Magazine.

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