Author: David Schwartz J.D. CPA
In a September 1, 2011
speech at Clare College in Cambridge, Paul Fisher, Executive Director for Markets of the Bank of England, outlined his thoughts on ways risk taking is executed and how contracts between parties assuming these risks can have profound effects on systematic stability beyond the normal consideration of formal regulations. In balancing public policy objectives of appropriate investor protection and systemic stability, it is important that that regulators and market participants critically evaluate their exposures, and take into account stress correlations with an eye on capturing tail events properly.