Author(s):	Stephen G Cecchetti, Kermit Schoenholtz
Publication Date:	November 2017
Keyword(s):	Capital requirements, Central clearing, financial regulation, liquidity requirements, macro-financial linkages, macroprudential policy, Prudential regulation, recovery and resolution planing
JEL(s):	E58, G01, G18, G28, G38
Programme Areas:	International Macroeconomics and Finance
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=12465

The financial crisis of 2007-09 revealed many deficiencies in the financial system. In response, authorities have implemented a wide range of regulatory reforms. We survey the reforms and offer our views on where there could be further improvements. While capital requirements and levels are far higher, they are not high enough. New liquidity requirements are useful, but need simplification. Shifting derivatives transactions to central counterparties has improved resilience, but also created indispensable financial market utilities that lack credible resolution and recovery regimes. And systemic (macroprudential) regulation lacks the metrics, policy tools, governance structure, and international cooperation needed to be effective.