Purpose

This independent blog collects news about projects or achievements in regulatory reform / better regulation. It is edited by Charles H. Montin. All opinions expressed are given on a personal basis.
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22 June 2011

Re-regulation back on the agenda for trade contracts

We BR experts have been working largely on the assumption that there was too much regulation around, especially on business. We always remember however that BR does not mean deregulation, but more relevant and efficient norms. The economic crisis has highlighted the vulnerabillity of our economies to unchecked speculation, which may be promoted in the absence of appropriate regulation. Recents events in Greece, though more structural, also call for prompt action. The current trend towards more regulation on financial activities was illustrated with the European Commission making proposals at the March Council. Now the French president, current head of the G20, in a speech in Brussels on 14 June, argued that the "financialisation" of commodity markets and trades that are not backed up by real money could lead to a repeat of the recent economic crisis. He calls for developing and enforcing better regulations of trades in the commodities market, and the extension of the use of cash deposits to all derivative deals. The issue had been under scrutiny since last summer. The European Commission, by the voice of Commissioner Michel Barnier, backed Mr. Sarkozy's proposals of capping individual trade sizes. So did Farm Groups around the world, according to Associated Press.
Meanwhile, the European Parliament, reacting to the March European Council conclusions quoted above, has stated that "finance ministers have not done enough to improve economic governance." The EC has already formulated a compromise version of its 6 proposal package (21 June).
For the theoretical background, see "Regulation and Markets" by D. Struber (1989), and for updates in thinking, a conference will be organised in London on 6 July by City and Financial.

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