Durable Financial Regulation: Monitoring Financial Instruments as a Counterpart to Regulating Financial Institutions
This paper sets forth a discussion framework for the information requirements of systemic financial regulation. It specifically describes a potential large macro-micro database for the United States based on an extended version of the Flow of Funds. I argue that such a database would have been of material value to U.S. regulators in ameliorating the recent financial crisis and could be of aid in understanding the potential vulnerabilities of an innovative financial system in the future. I also suggest that making these data available to the academic research community, under strict confidentiality restrictions, would enhance the detection and measurement of systemic risk.
I am employed by the Federal Reserve Bank of Philadelphia and during the period of this research also taught at Swarthmore College as an adjunct full preofessor. This does not reflect the opinions of the Federal Rserve Bank of Philadelphia or the Federal Reserve System. I have had no other sources of research support.