andreas dombret : financial regulation as a global challenge introductory statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at a roundtable discussion organised by the canon institute for global studies and the ehess, tokyo, 15 july 2014. * * * ladies and gentlemen thank you for having me today ; it is a pleasure to be here. for me, one of the central lessons from the financial crisis is this : the financial system is global in scope, and it therefore requires global regulation. to push this idea further, i would define the term “ global ” in at least three dimensions and argue that regulation should be consistent in all of them. first, regulation needs to be consistent across borders and regions. where regulation varies from country to country, there is a danger of regulatory arbitrage – of banks moving their business to countries with the lightest - touch regulation. the problem with this behaviour is that the risks that are transferred could potentially affect the entire financial system. this is why the g20 have made the issue of financial market regulation a priority. in cooperation with the financial stability board and the basel committee on banking supervision, they are working to develop a consistent regulatory framework at the global level. even so, i ’ m concerned to see that some countries outside europe are adopting their own regulatory initiatives which breach the principle of cross - border consistency. i believe that the danger of banking regulation one day returning to the principle of “ every man for himself ” needs to be taken seriously. we must not let this happen. second, regulation not only needs to be consistent across borders and regions but also across different sectors. here, too, the central issue is the danger of regulatory arbitrage. one current example is the growth of the shadow banking industry, where financial enterprises conduct business which creates bank - like risks but is either regulated insufficiently or not at all. with banking regulation being tightened, banks have even more incentives to move their business to the shadow banking system. thus, the shadow banking industry may become a source of systemic risk. we therefore need to expand the regulatory framework in this area to ensure that it is consistent. third, regulation needs to be consistent across asset classes. take the regulatory treatment of government bonds as an example. unlike for all other forms of credit, banks do not have to hold capital against government bonds in line with the risks that they carry, and this inconsistency has dangerous side - effects. since the euro -

andreas dombret : global reforms and the market economy system welcome address by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the reception given by the deutsche bundesbank at the annual congress of the verein fur socialpolitik, frankfurt am main, 6 september 2011. * 1. * * welcome ladies and gentlemen, members of the verein fur socialpolitik, on behalf of the deutsche bundesbank, i would like to warmly welcome you to this reception. i am especially delighted to accept the role of host at the bundesbank ’ s reception once again this year. the bundesbank is a true friend and supporter of the verein fur socialpolitik – and not without a certain degree of self - interest. the bundesbank considers science and research to be fields of great importance, since the work of central banks is today – more than ever – research and knowledge - based. time and again, research work has been the starting point for central bank policy decisions. conversely, problems we are currently witnessing in the central banks ’ various areas of operation stimulate new research projects. moreover, central banks offer an attractive research environment. i am therefore convinced that a close exchange with research institutions and universities benefits all concerned. the bundesbank maintains contacts and works together with a wide range of institutions and academics at the goethe university. one such example is the institute for monetary and financial stability ; it is financed by the monetary stability foundation, which in turn is run by the bundesbank. but cooperation also takes place on a less formal level, for instance with the center for financial studies and the graduate school here in frankfurt, to name but two examples. 2. lessons from the crisis – comments on the g20 agenda the topic of this year ’ s congress is “ the order of the world economy : lessons from the crisis ”, and the scope of the programme demonstrates the range of the related questions and answers. what are the right lessons to be learned from the crisis? this question was the subject of debate even before the first escalation of the crisis, namely the collapse of lehman brothers in september 2008. initially, it was thought by more than just a few that technical improvements in financial market regulation – notably concerning the securitisation market – would be a sufficient response to the crisis. however, when the most severe global economic crisis in decades took hold in the autumn of 2008, two points became