Friday, January 20, 2017

Jaime Caruana (BIS) - Post Crisis Safety Net - Lessons, Responses, Remaining Challenges

If you want to stay alert and informed about the status of potential systemic risks to the global financial system (which we do here), you should make it standard practice to monitor key speeches by BIS officials. Below is the conclusion section to a recent speech by Jaime Caruana (General Manager of the Bank for International Settlements. He provides somewhat of an update on how he views systemic risks at this point. We have covered this topic pretty heavily here over the past few years.



In sum, despite the improvements in many areas since the crisis, the system as a whole is facing new and evolving risks. I would like to think of these new challenges in systemic risks as encouragement for all of us here to persevere with finalising and implementing the post-crisis regulatory reforms in a timely fashion.
These challenges are also a reminder to be humble and to recognise that, in this complex world, mitigating systemic risk requires a wider perspective and action in a variety of policies. The key areas in the regulatory reform agenda - regulation and supervision, resolution and deposit insurance - are no doubt very important, but they may not be enough.
Reforms are also needed to raise productivity growth, generate earning and repayment capacity, and improve the outlook for the longer term. Monetary policy and fiscal policy, for their part, would do well to take financial stability considerations and their longer-term impact on the real economy into account.
Indeed, financial stability is a joint responsibility. For our community of supervisors, deposit insurers, central bankers and representatives of international organisations, interaction and cooperation are more crucial than ever.
I hope this conference represents another valued opportunity for all of us to work towards this common goal. I wish you all a very productive time here.
(underline in the text above is my addition)

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