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G20 and EU actions could increase chances of future financial crises

The G20 and the EU’s overhaul of financial regulations has been slammed for being “disingenuous political posturing” and “increasing the chances of future meltdowns”.

The Taxpayers’ Alliance claims that both politicians and regulators have based their response to the financial crises on “mistaken views of its causes” and “political considerations”, The Telegraph reports.

The paper highlights key aims of politicians for internationally co-ordinated regulation, claiming that “global regulation causes global crises”.

The report says: “Common capital adequacy rules, while increasing transparency, also encourage homogeneity in investment strategy and undertaking of risk, leading to a high concentration of risk. That means that global regulations can be dangerous because they increase the amplitude of global credit cycles.”

The paper was co-written with the Legatum Institute, which is an academic group that focuses on wealth.

The reports says: “”The Basel regulations may still be procyclical, imposing more onerous requirements on institutions at times when the system is in trouble.”

The report argues that in addition to “greed and insufficient regulation” being two of the main causes of the crises, it says “regulation and poor policy choices” were also to blame, highlighting the fact that policy makers may be set to repeat those mistakes again.

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Jeremy Pearson is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. Many parents value the standard of education offered by […]

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