Sunday, 29 March 2009

A saner financial architecture may have to wait until Meltdown Phase 2

Separating out the riskier forms of banking from the rest would be the sanest way to go in terms of new regulatory structures/protocols. But it would have to proceed on a global basis otherwise there will be jurisdictional arbitrage.

We should welcome any progress that could be made to a more efficacious global regulatory framework as it would hopefully lead to a smaller safety net being required when the inevitable accidents happen.

However, given the lack of sincere leadership on this issue at present, and the growing evidence of politicians pandering to national/local hot button issues, we may have to wait for Meltdown Phase 2 to present itself before this matter is properly addressed.

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