1. 1 The Geneva Report By Charles Goodhart Financial Markets Group London School of Economics Purpose of exercise: To influence policy. What has been achieved? What remains in dispute?

2. 2 What has been achieved? Framework of analysis:- 1.Macro-prudential analysis and instruments (Andrew Crockett). Fallacy of composition (Persaud). Importance of externalities (Brunnermeier and Goodhart). 2.Self-amplifying mechanisms (Brunnermeier and Shin). 3.Importance of leverage, and de-leverage in a crisis/bust (Shin). 4.Desirability of counter-cyclical instruments (Goodhart and Persaud).

3. 3 5. Reconsideration of liquidity Regulation (Persaud). 6. Need for regulation of systemic financial intermediaries. 7. ‘Systemic as part of a herd’ 8. Structure, Macro-prudential to Central Bank: Micro-prudential to FSA (twin pillars). Pick up on other ideas, e.g. ‘living will’, remuneration, margin requirements on LTVs, CCPs for derivatives, etc., but not original.

4. 4 What remains in dispute, or uncertain. 1.Application of counter-cyclical CARs:- (a) Sqam Lake, NYU, Rajan, alternative (b) Will not help banks in crisis, because market will provide binding constraint. (c) Too difficult and arbitrary. Possible outturn. Maximum leverage ratio, allow this to be increased by discretion. 2.Definition of ‘systemic’. Time/state varying. Publication? Happy with Geneva Report position, but not taken up. 3.What to do about systemic as a herd? Leverage reports and controls?

5. 5 4.Structure of Regulation Domestic: Relative roles of Central Bank, FSA and Treasury. Crossborder: International in life; national in death. Two logical conclusions:- (a) Shift control to host countries, (IIF violently opposed). (b) Shift fiscal crisis-resolution to supra-national (fiscal) basis. EU incoherent, opposed to (i), but cannot do (ii). So what will happen? Appearance (ESRC), but not reality.