Wednesday, August 2, 2017

Treasury Secretary on the State of the Global Financial System

Mnuchin Briefs Congress on his Marching Orders

Author: David Schwartz

On July 27, 2017, Treasury Secretary Steven Mnuchin delivered the Department of the Treasury’s annual report on the state of the international financial system. Mnuchin’s testimony covered many topics ranging from the Volcker Rule to tax reform and China equity caps. The hearing was sometimes contentious, with Rep. Maxine Waters (D-CA) sparring with Secretary Mnuchin over his apparent failure to respond to letters of inquiry from Waters. Despite the fireworks, Mnuchin laid out some of his thoughts on the state of domestic and global financial markets as well as the Treasury’s plans for recalibration of Dodd-Frank regulatory reforms.

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Friday, July 28, 2017

Fed Nominee Favors Regulatory Refinement and Transparency

Randal Quarles says “some refinements” are in order.

Author: David Schwartz

At his July 27, 2017 confirmation hearing before the Senate Banking Committee, Randal Quarles testified that if confirmed he would advocate not for a rollback, but a reexamination of post-crisis reforms. He also advocated for better transparency on the part of regulators, and promised to approach the position with an open mind and in cooperation with the members of the Committee. 

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Wednesday, July 26, 2017

There is No Room for Complacency

French Central Banker Outlines Priorities to Complete Post-Crisis Reform

Author: David Schwartz

In a July 12, 2017 address before the Paris Europlace International Financial Forum, François Villeroy de Galhau, Governor of the Banque de France, outlined what he sees is necessary to complete the work of financial regulatory reform. Noting that resilience of the global financial system has significantly improved in eight years as a result of sweeping regulatory changes, de Galhau urged regulators and central bankers not to be complacent. There is work yet to finish on the new regulatory framework, and steps that must be taken to consolidate the achievements made thus far in making the global economy safer and more secure.

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Wednesday, July 19, 2017

Regulatory Actions Drive Lasting Change

New SEC Chairman Sets Out His Regulatory Vision

Author: David Schwartz

In his first address as Chairman of the Securities and Exchange Commission, Jay Clayton reaffirmed his dedication to the Commission’s guiding principles and historic approach to regulation. At the same time, however, Chairman Clayton said he sees areas where the SEC’s regulations need to evolve to "reflect the realities of our capital markets.” One of these realities is that implementing regulatory change has costs, and over time cumulative regulation and the associated costs can drive behavior that has dramatic effects on the market.

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Sunday, July 16, 2017

Securities Finance Faces 'Fickle' Future

EU Central Banker Raises Liquidity and Collateral Concerns

Author: David Schwartz

In a June 21, 2017 address before the 26th Annual Securities Finance and Collateral Management Conference in Berlin, Deutsche Bundesbank Board Member Professor Joachim Wuermeling warned that the securities finance sector faces some unique liquidity and collateral challenges. In particular, he noted that the extraordinary measures taken by central banks to shore up liquidity in the years since the financial crisis may be distorting liquidity and affecting collateral quality in securities lending and repo markets.  Measures like the Public Sector Purchase Programme (PSPP) and central bank securities lending and bi-lateral repo facilities intended to backstop liquidity in securities financing markets may, in the long run, have unexpected effects on liquidity and could have a negative effects on transaction costs and order book depth, creating “fickle” conditions for market participants. 

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