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Voting Twice
(2009)VOX CEPR's Policy PortalHow might we limit the accumulation of public debt by democratic governments? This column proposes “voting twice" – first for a deficit ceiling and second for a particular budget. Such a procedure might strike a balance between flexibility and the commitment to refrain from loading debt onto future generations.Other Publication -
Double Targeting for Central Banks with Two Instruments
(2010)VOX CEPR's Policy PortalShould monetary policy and banking regulation be conducted by separate bodies? This column proposes a new policy framework whereby the central bank chooses short-term interest rates and the aggregate equity ratio while banking regulation and supervision, including the determination of bank-specific capital requirements, would be left to separate bank-regulatory authorities.Other Publication -
Banking on the Average
(2011)VOX CEPR's Policy PortalCurrent regulation imposes fixed capital requirements on banks. However, this makes it impossible to use regulatory capital as a buffer against negative macroeconomic shocks. This column explains how this paradox could be resolved by basing capital requirements each year on average bank equity capital in the industry.Other Publication -
Crisis Contracts
(2011)VOX CEPR's Policy PortalWhen banks failed, the government paid up. But the bankers responsible kept their bonuses from the years of excess. This column argues for “crisis contracts”. Such contracts require that, in the event of a crisis, bank managers forfeit a portion of their past earnings to rescue the banking system.Other Publication -
Money and Banking - Realigned Efficiently
(2011)Current macroeconomic policymaking suffers from an inadequate range of instruments and the absence of a comprehensive assignment of responsibilities. This column introduces a new CEPR Policy Insight designed to remedy these shortcomings. It proposes a framework for monetary, macroprudential, and microprudential policies.Other Publication -
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Inflation Targeting and Bank Equity Rules
(2009)VOX CEPR's Policy PortalThis column suggests that there are surprising parallels between inflation targeting and bank capital requirements. It shows they could inform each other.Other Publication -
Insurance against systemic crises
(2009)VOX CEPR's Policy PortalThe crisis is a brutal reminder of the fragility of banks. This column suggests that managers of large banks be obliged to act as insurers against systemic crises. This would create incentives for them to be concerned about the stability of the banking system as a whole.Other Publication -