Regulatory Outreach for Student Education

Engaging Students in the Debate Over Financial Services Reform

Today’s debate over regulatory reform is a watershed activity in the careers of financial industry professionals. Years ago, similar debates over mandated pre-funding of pension liabilities (ERISA) and the reunification of investment banking with commercial banking (Glass Steagall's repeal) changed the direction of financial market evolution. Opinions may differ on the merits of those changes, but no one disputes their significance.

Without question, college students and young professionals should be well-versed in the issues involved in today's debate. The Regulatory Outreach for Student Education (ROSE) program is the Center's way to give top students, tomorrow's business and finance leaders, opportunities to experience the financial regulatory process up-close.  The ROSE program is designed to put students in touch with the regulators, policy-makers, and industry leaders who are currently shaping the financial regulatory landscape.  We then challenge them to research and articulate their own positions on the most intriguing and interesting issues.  

ROSE Program Blog

Wednesday, November 26, 2014

G20 Brisbane Meeting Promises Focus on Resilient Financial System

Expanding the Financial Sector's Role in Building a Stronger and More Sustainable Global Economy


Author: David Schwartz J.D. CPA

With the conclusion of their November 15 and 16 meeting in Brisbane, the G20 has published their official communiqué outlining the group’s progress, plans, and areas of focus. Financial regulatory reform remains the central focus of G20 activities. However, with the slow global recovery and disappointing job growth, the G20 announced that they expect to emphasize expanding the financial sector's role in building a stronger and more sustainable global economy. The overall thrust of the G20’s Brisbane communiqué is that critical work remains to build a stronger, more resilient financial system. Over the next year, the group intends to continue to finalize the various elements of its policy framework that remain open, fully implement financial regulatory reforms already agreed upon, and be vigilant for new risks and unexpected consequences.


The G20’s Brisbane communiqué and its annex set forth 800 new commitments ranging from trade measures and other product market changes, to labor market changes, spending on research and development, tax changes, and public infrastructure.  These commitments fall into two broad categories, and we have summarized some of the G20's findings in each area: 

  


Building a stronger, more resilient global economy. 


Strength through Safety. The key to strengthening the resilience of the global economy and stability of the financial system is sustaining growth and development. The G20 reports that it has met most if not all of the core commitments it made in response to the financial crisis. It intends to focus on reducing risks in the financial system by instituting further reforms to improve banks' capital and liquidity positions and to make derivatives markets safer.


Strengthening global institutions.


Bank Loss Absorbing Capacity.

The G20 welcomed the Financial Stability Board's (FSB) proposal requiring global systemically important banks (G-SIBs) to hold additional loss absorbing capacity (TLAC) intended to protect taxpayers if these banks fail. No doubt reacting to objections from members of the banking industry, however, the G20 clarified that the proposal must be subject to a rigorous quantitative impact assessment and further refinement before any final measure is agreed by the 2015 summit. The G20 is particularly concerned that the impact analysis include consideration of the consequences of this requirement on banks in emerging markets and state-owned banks.


Derivatives reforms. Seemingly frustrated with the pace of derivatives reforms, the G20 called on regulatory authorities to redouble their efforts to both pick up the pace and make further concrete progress in implementing the agreed G20 derivatives reforms. In accordance with the September 2013 St. Petersburg Declaration, the G20 encourages countries encouraged to cooperate and defer to each other when justified.


Shadow banking. The G20 reported that they have agreed to measures to dampen risk channels between banks and non-banks.  In addition, the group lauded the progress that has been made in delivering the shadow banking framework this year and the G20 endorsed an updated roadmap for further work.  


It was further confirmed that China would be the G20 host in 2016 following next year’s meeting Turkey.  



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