Issues in Finance
Introduction
In this article the main issues I will be looking at the issues raised around the views of Robert Shiller in his recent interview and book, finance and the good society and his opinions on the democratization of finance. The other aspect that I will also be looking at is the current regulatory reform measures that have been introduced in the OECD countries, including the long term and short-term measures and why they have been introduced.
In Shiler’s recent interview and book he raises the issue that financial capitalism is an invention and it should be further expanded and democratize so that financial systems can have a positive impact on a greater number of people around the world (Shiller r 2012). What Shiller means by this is making financial systems more accessible and serving the people better. In turn Shiller explains this will help to reduce the risk of another financial crisis like the recent 2008 economic down turn.
With the recent financial crisis there has been the introduction of regulatory reform measures to reduce risk of systematic failure within the financial system and investor protection. The main measures have included capital regulations e.g. basil 3, ring fencing investment and retail banking and the centralized clearing of derivatives.
The current regulatory reform proposals can be put into three main categories, reform of the markets, reform of the institutions and reform of the regulators. One of the key areas of reforming the markets has been to trade derivatives onto exchanges and to clear them centrally. This is aimed at stopping a repeat of the AIG collapse in 2008 when the US government had to intervene with a $85 Billion dollar bail out to stop it from collapsing, the government said it was an institution to big to fail (Egginton, Hilliard 2010). This has been implemented via the Dod Frank act and this legislation is aimed at increasing greater transparency to control the risk of systemic failure (PWC
In this article the main issues I will be looking at the issues raised around the views of Robert Shiller in his recent interview and book, finance and the good society and his opinions on the democratization of finance. The other aspect that I will also be looking at is the current regulatory reform measures that have been introduced in the OECD countries, including the long term and short-term measures and why they have been introduced.
In Shiler’s recent interview and book he raises the issue that financial capitalism is an invention and it should be further expanded and democratize so that financial systems can have a positive impact on a greater number of people around the world (Shiller r 2012). What Shiller means by this is making financial systems more accessible and serving the people better. In turn Shiller explains this will help to reduce the risk of another financial crisis like the recent 2008 economic down turn.
With the recent financial crisis there has been the introduction of regulatory reform measures to reduce risk of systematic failure within the financial system and investor protection. The main measures have included capital regulations e.g. basil 3, ring fencing investment and retail banking and the centralized clearing of derivatives.
The current regulatory reform proposals can be put into three main categories, reform of the markets, reform of the institutions and reform of the regulators. One of the key areas of reforming the markets has been to trade derivatives onto exchanges and to clear them centrally. This is aimed at stopping a repeat of the AIG collapse in 2008 when the US government had to intervene with a $85 Billion dollar bail out to stop it from collapsing, the government said it was an institution to big to fail (Egginton, Hilliard 2010). This has been implemented via the Dod Frank act and this legislation is aimed at increasing greater transparency to control the risk of systemic failure (PWC