1. Better safe than sorry: Macroprudential policy, Covid 19 and climate change
- Author
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Gaëtan Le Quang, Laurence Scialom, EconomiX, Université Paris Nanterre (UPN)-Centre National de la Recherche Scientifique (CNRS), Groupe d'analyse et de théorie économique (GATE Lyon Saint-Étienne), École normale supérieure - Lyon (ENS Lyon)-Université Lumière - Lyon 2 (UL2)-Université Claude Bernard Lyon 1 (UCBL), Université de Lyon-Université de Lyon-Université Jean Monnet [Saint-Étienne] (UJM)-Centre National de la Recherche Scientifique (CNRS), Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne (GATE Lyon Saint-Étienne), École normale supérieure de Lyon (ENS de Lyon)-Université Lumière - Lyon 2 (UL2)-Université Claude Bernard Lyon 1 (UCBL), and Université de Lyon-Université de Lyon-Université Jean Monnet - Saint-Étienne (UJM)-Centre National de la Recherche Scientifique (CNRS)
- Subjects
050208 finance ,Climate risk ,As is ,media_common.quotation_subject ,05 social sciences ,Financial market ,Climate change ,Financial system ,[SHS.ECO]Humanities and Social Sciences/Economics and Finance ,Discount points ,General Business, Management and Accounting ,Macroprudential regulation ,Financial regulation ,State (polity) ,[No keyword available] ,0502 economics and business ,Economics ,050207 economics ,General Economics, Econometrics and Finance ,ComputingMilieux_MISCELLANEOUS ,media_common - Abstract
The crisis of 2007-08 called for a renewal of banking regulation that took the shape of a shift toward macroprudential policy. However, a comprehensive assessment of the current state of financial regulation reveals that this shift is incomplete. In particular, the notion of risk that lies at the heart of the Basel framework is still blind to extreme events. Climate risk and pandemic risk fall into this category. The purpose of this article is twofold. On the one hand, we point out why current banking regulation is not adequate to face risks whose origin is grounded outside financial markets – as is the case for both the pandemic and the climate risks –; on the other hand, we offer avenues for reforming macroprudential regulation in a way that would allow to take those risks into account.
- Published
- 2022