A Mandatory Approval of Complex Financial Instruments: The Need for a Precautionary Policy to Make Financial Markets Economically Sustainable

Saturday, 11 Oct, 9 – 10:30, Room: tbc

A Mandatory Approval of Complex Financial Instruments: The Need for a Precautionary Policy to Make Financial Markets Economically Sustainable

Sponsor: World Future Council

Panelists: Manuel Montes (South Centre), Nathan Coplin (New Rules for Global Finance), CHAIR: Suleika Reiners (World Future Council)

The IMF wants regulators to be prepared to identify systemically important financial instruments (GFSR, Apr 2014, p 20) and has also called for simpler financial instruments (GFSR, Oct 2012, p 112). Complex financial instruments can increase systemic risks and jack up leverage in the financial system. A key driver of new financial instruments is the desire to overcome regulation and avoid taxes. Transparency is impossible so long as financial instruments are overly complex.

For these reasons, we will be presenting and discussing a policy proposal for the mandatory approval of financial instruments. The goal of the session is to further develop the proposed policy and to continue building an international community of stakeholders and proponents. We will be looking at spillovers caused by financial instruments by focusing on experiences from the Global South. We will be discussing how to prevent harmful financial innovation and also investigate ways to encourage appropriate financial instruments. The World Future Council has previously organized an international workshop in Brussels which brought together leading academics, key stakeholders and policy-makers.

Suleika Reiners
Policy Officer Future Finance
 
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