A PERSPECTIVE ON FINANCIAL MARKET REFORM

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Abstract

In response to a nationwide decline in U.S. house prices that had significant repercussions for the U.S. and global financial markets, many countries are considering a wide variety of financial market reforms. Most of the proposed reforms include the establishment of new governmental agencies to regulate banks and other financial institutions and/or to prohibit or restrict certain types of financial transactions. I offer several guiding principles for financial reform and suggest the types of reforms that are likely to generate the best results based on these principles. Finally, I discuss the role that the central bank can play in mitigating the size, duration, and effects of financial crises. While the analysis draws heavily on the U.S. experience, I believe that the implications apply globally.

Keywords: Financial Market, Financial Institutions, Banks

How to cite this paper: Thornton, D. L. (2011). A perspective on financial market reform [Special issue]. Corporate Ownership & Control, 8(2-2), 62-65. https://doi.org/10.22495/cocv8si2p1