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Third Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”

Third Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort... The B.E. Journal of Macroeconomics Special Issue: Long-Term Effects of the Great Recession Volume 12, Issue 3 2012 Article 19 Donald Kohn* *Senior Fellow, Brookings Institution, dkohn@brookings.edu DOI: 10.1515/1935-1690.118 Copyright ©2012 De Gruyter. All rights reserved. I will address the topic for this panel, but in a somewhat broader context. Dodd-Frank made far-reaching changes in the techniques available to the Federal Reserve and other government authorities to deal with a systemic financial crisis. Many of these could well affect the dynamics of both private and public sector provision of liquidity in a developing crisis. It's this broader context that we need to think about and be prepared for. I start from a couple of key premises. One is that the response to the last crisis in Dodd-Frank and other actions taken by the regulators is making the onset of the next systemic crisis less likely. Banks and other regulated institutions will have more capital, greater liquidity, and better risk management systems than they had in 2007; interconnections among institutions will be less complex and risk easier to monitor, especially in derivative markets; elements of countercyclicality will be introduced into regulation--macroprudential regulation--that should help ameliorate the build up of http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The B.E. Journal of Macroeconomics de Gruyter

Third Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”

The B.E. Journal of Macroeconomics , Volume 12 (3) – Oct 25, 2012

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Publisher
de Gruyter
Copyright
Copyright © 2012 by the
ISSN
1935-1690
eISSN
1935-1690
DOI
10.1515/1935-1690.118
Publisher site
See Article on Publisher Site

Abstract

The B.E. Journal of Macroeconomics Special Issue: Long-Term Effects of the Great Recession Volume 12, Issue 3 2012 Article 19 Donald Kohn* *Senior Fellow, Brookings Institution, dkohn@brookings.edu DOI: 10.1515/1935-1690.118 Copyright ©2012 De Gruyter. All rights reserved. I will address the topic for this panel, but in a somewhat broader context. Dodd-Frank made far-reaching changes in the techniques available to the Federal Reserve and other government authorities to deal with a systemic financial crisis. Many of these could well affect the dynamics of both private and public sector provision of liquidity in a developing crisis. It's this broader context that we need to think about and be prepared for. I start from a couple of key premises. One is that the response to the last crisis in Dodd-Frank and other actions taken by the regulators is making the onset of the next systemic crisis less likely. Banks and other regulated institutions will have more capital, greater liquidity, and better risk management systems than they had in 2007; interconnections among institutions will be less complex and risk easier to monitor, especially in derivative markets; elements of countercyclicality will be introduced into regulation--macroprudential regulation--that should help ameliorate the build up of

Journal

The B.E. Journal of Macroeconomicsde Gruyter

Published: Oct 25, 2012

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