Edward Kane - Political Economy of Controlling Systemic Risk

The video discusses the political economy of controlling systemic risk, highlighting the challenges in defining and managing systemic risk. It critiques the reliance on taxpayer bailouts and the avoidance of accountability by officials. The speaker argues for a redefinition of systemic risk, emphasizing the need for regulatory reforms and improved transparency. The discussion includes the role of safety nets, incentive conflicts, and the importance of due diligence. Proposals for reform include better training for regulators and enhanced accountability measures.

What is the primary focus of the political economy in controlling systemic risk?

• To increase financial sector profits

• To reduce government intervention

• To redefine tasks in a self-serving way

• To enhance public awareness

What is a major critique of the official definitions of systemic risk?

• They are too complex

• They focus on individual defaults

• They rely heavily on judgment

• They are universally accepted

What is a key issue with the current treatment plans for systemic risk?

• They are overly detailed

• They are superficial

• They are too expensive

• They are universally effective

What is a consequence of central banks rescuing 'zombie firms'?

• Increased market competition

• Higher taxpayer burden

• Reduced financial stability

• Improved economic growth

What is a proposed reform to improve crisis management?

• Reducing regulatory oversight

• Eliminating safety nets

• Enhancing transparency and accountability

• Increasing financial sector autonomy