Financial Markets and Public Policy in the Year 2000
Publisher: Aei Pr
Published: July 1996
Format: Hardcover
Number of pages: 132
ISBN-13: 9780844738727
Subjects: Banks And Banking; Regulation Of Industry; Business/Economics
Description: Dramatic changes in information and telecommunications technologies have transformed U.S. financial markets in the 1980s and 1990s. This book examines the growth of mutual funds and derivatives markets and the decline of banks and explores implications of those developments for financial stability and regulatory policy. One of the book's central conclusions is that the current system of bank regulation is out of step with today's financial realities and needs to be substantially changed.

Franklin Edwards asserts that the best way to increase the freedom of financial institutions to compete while making the financial system less vulnerable to excessive risk-taking by individual financial institutions is to adopt a system of collateralized banking.

He shows how adopting such a system will result in a more stable financial system, both by reducing our reliance on government to maintain financial soundness and by enhancing the effectiveness of private markets in controlling institutional risk taking.