In connection with a special roundtable event that PIFS, in partnership with Harvard Law School, hosted on November 16, 2018, PIFS prepared a document to provide participants an overview of stress testing regimes in four jurisdictions – the United States, United Kingdom, European Union, and Japan. The overview focused on four major topics. 

Abstract Purpose – The purpose of this paper is to propose reforms that would establish a credible framework of rules to constrain and guide emergency lending by the Federal Reserve and by fiscal authorities during a future financial crisis. Design/methodology/approach – The authors propose a set of five overarching rules, informed by history, empirical evidence […]

Acharya et al define SRISK as a macro-finance measure of systemic risk to furnish “an estimate of the amount of capital that a financial institution would need to raise in order to function normally if we have another financial crisis.” SRISK measures the “expected capital shortfall” of an institution during a financial crisis, defined as […]

Operational risk is fundamentally different from all other risks taken on by a bank. It is embedded in every activity and product of an institution, and in contrast to the conventional financial risks (e.g. market, credit) is harder to measure and model, and not straight forwardly eliminated through simple adjustments like selling off a position. […]

This article for the first time compares the Federal Reserve’s powers as lender of last resort (‘LLR’) and its ability to fight contagion, with its three major peers, the Bank of England (the ‘BOE’), the European Central Bank (the ‘ECB’) and the Bank of Japan (the ‘BOJ’). It concludes that the Federal Reserve (the ‘Fed’) […]

This article explores the importance of an efficient retail payment system and develops an integrated framework for evaluation of the retail payment system by policy makers. It examines the costs and benefits of the various types of retail payment system, focusing on the seven desirable benefits of the retail payment system: (1) finality and reversibility; […]

Part I of this Article discusses in detail the shortcomings of the modern class action system, including its uncertain benefits (in terms of compensation and deterrence) as well as its indisputable high costs. Part II then presents the benefits of the mandatory individual arbitration stockholder proposal and why it is likely to be upheld if […]

Harvard Law School Public Law & Legal Theory Working Paper Series Paper No. 12-16

Capital requirements are a key element in containing systemic risk. This article argues that the market needs to play a more significant role in determining these requirements. The Basel process has a bad track record and there are inherent methodological and political difficulties in a group of regulators, particularly an international one, determining the appropriate […]

On January 14, 2010, the Obama Administration announced its proposal for a Financial Crisis Responsibility Fee – the bank tax.1 In principle, the tax would be imposed on certain financial institutions with $50 billion or more in consolidated assets, and was originally designed to recover the funds paid out under the Troubled Asset Relief Program […]