Edited by Thorsten Beck - Vox

VOX Research-based policy analysis and commentary from leading economists
introduction of ‘European Safe Bonds’ (ESBies). They discuss capital and liquidity
requirements and maintain that risk weights that are dynamic, counter-cyclical and
take into account the co-dependence of financial institutions are crucial, and that
liquidity requirements should be adjusted to make them less rigid and pro-cyclical. The
relationship of bank tax and risk-taking behaviour is also analysed.
An important question in the banking debate is whether regulation is stimulating or
hindering retail banking, and what the potential implications are of multiple, but
uncoordinated, reform frameworks, such as the Basel III requirements, the Capital
Requirements Directive IV in Europe, the Dodd-Frank Act in the US, and the
Independent Commission on Banking Report in the UK, etc? There is a call for more
joined-up thinking and action in banking regulatory reform and the authors in this book
stress the need for a stronger, European-wide regulatory framework as well as for a
European-level resolution authority for systemically important financial institutions
(SIFIs).
Whilst it is important that policy makers ensure that regulation serves to stabilise the
banking sector and make it more resilient, the authors remind us that it is equally, if not
more, important to ensure that we do not forget the essential role of banks in terms of
their vital contribution to the ‘real economy’ and the pivotal role they play as lenders to
small- and medium-size enterprises in support of economic growth at local and regional
levels.
We are grateful to Thorsten Beck for his enthusiasm and energy in organising and
co-ordinating the inputs to this book; we are also grateful to the authors of the papers
for their rapid responses to the invitation to contribute. As ever, we also gratefully
acknowledge the contribution of Team Vox (Jonathan Dingel, Samantha Reid and Anil
Shamdasani) who produced the book with characteristic speed and professionalism.
What began as a banking crisis in 2008, symbolised by the collapse of Lehman Brothers,
soon became a sovereign debt crisis in Europe, which in turn has precipitated a further
banking crisis with potentially massive global implications; if European banks fail
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