Discussion of Martin Windl: Net Stable Funding Ratio and Liquidity Hoarding

摘要

The last years experienced a tsunami of banking regulation. Established concepts very revamped, and many new rules were introduced. This high level of state intervention into the economy seems to be sanctified by the high costs the global financial crisis around 2008 burdened on the economy and the tax payers. However, this approach poses several question: Is the high level of regulation as such enhancing the efficiency and stability of the financial system, or could it also represent a new threat to the stability of the system and provoke a banking crisis? And furthermore: Are the individual instruments applied today meaningful in the sense that they really reduce systemic risk? In a complex system like today's financial markets, the effect of a regulatory measure is not necessarily as intended. Negative feedback from the markets could distort the envisioned effect. In the end, we might be worse off, i.e., created regulatory costs while even increasing systemic risk.