Reframing Financial Regulation: Enhancing Stability and Protecting Consumers

The financial system is a critical engine that keeps the economy vibrant. Serving consumers faced with unanticipated expenses, investors planning their futures, and small businesses looking to expand, it creates economic opportunities for all participants in society. In recent years, however, worries about too-big-to-fail and too-small-to-borrow have led many to question whether financial markets are working the way they should.

Designing a regulatory framework that ensures the resilience of the financial system and supports economic growth and individual prosperity has proven elusive to policymakers and interested observers. Every several years, policymakers scramble to re-regulate the financial system, particularly after a financial crisis has occurred. Too often, new “this time we really mean it” regulations are simply added onto existing ones, which makes for an unwieldy regulatory framework. Real reform requires reimagining the framework from the ground up, a task this book undertakes.

Reframing Financial Regulation: Enhancing Stability and Protecting Consumers, edited by Hester Peirce and Benjamin Klutsey, brings together a diverse set of authors to provide alternative ways to regulate different aspects of the financial system. The chapters embody approaches that rely less on centralized, top-down regulations and more on market discipline and oversight. The book, which reflects a wide variety of viewpoints and approaches, seeks to initiate a lively conversation about how a thoughtfully regulated, market-based financial system can facilitate risk sharing, efficiently provide access to capital, and enable households to save for the future.