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    Claudia Buch of Bundesbank on Evaluating Financial Sector Reforms

    June 12, 2017

    Claudia Buch, Deputy President of the Deutsche Bundesbank, took part in the panel discussion on "Improving Financial Resilience," at the T20 Summit "Global Solutions" in Berlin on May 30, 2017. She discussed the evaluation of effectiveness of financial sector reforms as a joint task for academia and policymakers, based on transparency, international coordination, and independent assessments.

    She discussed the proposed framework of FSB for evaluating financial reforms and highlighted that an effective framework for evaluation of post-crisis financial sector reforms is lacking at the global level. Policy evaluation needs to be part of a structured policy process involving four steps: specifying the objectives of reforms, defining intermediate targets, calibrating instruments and assessing the expected impact, and assessing the impact post implementation. This is the gap that the FSB framework is about to close. It is about answering the question of whether the reforms have achieved their intended outcomes, whether they work together as intended, and whether they have had material unintended consequences. Such side effects may have to be addressed, but without compromising on the objectives of the reforms or by reducing resilience. The framework provides a common understanding of the elements required for a “good” policy evaluation and it will provide a basis for an informed and evidence-based discussion on regulatory policies. To address challenges of policy evaluation, she suggests investigating whether a reform caused an outcome (attribution), whether a reform had similar effects across markets and jurisdictions (heterogeneity), and whether it achieved its overall objective (general equilibrium).

     

    She also emphasized that both academics and policymakers would benefit from engaging in better policy evaluations. Academia could engage in developing methodologies and in studying designs that contribute to societal welfare, without compromising on academic rigor. Policymakers could draw on the rich expertise that is available and make better use of existing infrastructures. Moreover, some of the mechanisms that have been developed in academia to mitigate misaligned incentives and ensure transparency are readily applicable to policy evaluations. She said that policy evaluation means being transparent about the goals of regulatory policies and what these policies have actually achieved. Setting standards, learning from good practices, and international coordination are also vital. The FSB, in coordination with international standard setting bodies, can play an important role in this regard. "Its proposal for a framework for policy evaluation comes at the right time and addresses the right issues." Finally, she also looked at the need for independent, objective assessments to obtain an unbiased picture on the effects of reforms, highlighting that appropriate institutional arrangements such as peer reviews, independence from policy groups, and direct reporting lines need to be in place.

     

    Related Link: Speech (PDF)

    Keywords: International, BIS, Financial Reforms, Bundesbank, Regulatory Reform, Banking, Securities, Insurance



    She discussed the proposed framework of FSB for evaluating financial reforms and highlighted that an effective framework for evaluation of post-crisis financial sector reforms is lacking at the global level. Policy evaluation needs to be part of a structured policy process involving four steps: specifying the objectives of reforms, defining intermediate targets, calibrating instruments and assessing the expected impact, and assessing the impact post implementation. This is the gap that the FSB framework is about to close. It is about answering the question of whether the reforms have achieved their intended outcomes, whether they work together as intended, and whether they have had material unintended consequences. Such side effects may have to be addressed, but without compromising on the objectives of the reforms or by reducing resilience. The framework provides a common understanding of the elements required for a “good” policy evaluation and it will provide a basis for an informed and evidence-based discussion on regulatory policies. To address challenges of policy evaluation, she suggests investigating whether a reform caused an outcome (attribution), whether a reform had similar effects across markets and jurisdictions (heterogeneity), and whether it achieved its overall objective (general equilibrium).

     

    She also emphasized that both academics and policymakers would benefit from engaging in better policy evaluations. Academia could engage in developing methodologies and in studying designs that contribute to societal welfare, without compromising on academic rigor. Policymakers could draw on the rich expertise that is available and make better use of existing infrastructures. Moreover, some of the mechanisms that have been developed in academia to mitigate misaligned incentives and ensure transparency are readily applicable to policy evaluations. She said that policy evaluation means being transparent about the goals of regulatory policies and what these policies have actually achieved. Setting standards, learning from good practices, and international coordination are also vital. The FSB, in coordination with international standard setting bodies, can play an important role in this regard. "Its proposal for a framework for policy evaluation comes at the right time and addresses the right issues." Finally, she also looked at the need for independent, objective assessments to obtain an unbiased picture on the effects of reforms, highlighting that appropriate institutional arrangements such as peer reviews, independence from policy groups, and direct reporting lines need to be in place.

     

    Related Link: Speech (PDF)

    She discussed the proposed framework of FSB for evaluating financial reforms and highlighted that an effective framework for evaluation of post-crisis financial sector reforms is lacking at the global level. Policy evaluation needs to be part of a structured policy process involving four steps: specifying the objectives of reforms, defining intermediate targets, calibrating instruments and assessing the expected impact, and assessing the impact post implementation. This is the gap that the FSB framework is about to close. It is about answering the question of whether the reforms have achieved their intended outcomes, whether they work together as intended, and whether they have had material unintended consequences. Such side effects may have to be addressed, but without compromising on the objectives of the reforms or by reducing resilience. The framework provides a common understanding of the elements required for a “good” policy evaluation and it will provide a basis for an informed and evidence-based discussion on regulatory policies. To address challenges of policy evaluation, she suggests investigating whether a reform caused an outcome (attribution), whether a reform had similar effects across markets and jurisdictions (heterogeneity), and whether it achieved its overall objective (general equilibrium).

     

    She also emphasized that both academics and policymakers would benefit from engaging in better policy evaluations. Academia could engage in developing methodologies and in studying designs that contribute to societal welfare, without compromising on academic rigor. Policymakers could draw on the rich expertise that is available and make better use of existing infrastructures. Moreover, some of the mechanisms that have been developed in academia to mitigate misaligned incentives and ensure transparency are readily applicable to policy evaluations. She said that policy evaluation means being transparent about the goals of regulatory policies and what these policies have actually achieved. Setting standards, learning from good practices, and international coordination are also vital. The FSB, in coordination with international standard setting bodies, can play an important role in this regard. "Its proposal for a framework for policy evaluation comes at the right time and addresses the right issues." Finally, she also looked at the need for independent, objective assessments to obtain an unbiased picture on the effects of reforms, highlighting that appropriate institutional arrangements such as peer reviews, independence from policy groups, and direct reporting lines need to be in place.

     

    Related Link: Speech (PDF)

    She discussed the proposed framework of FSB for evaluating financial reforms and highlighted that an effective framework for evaluation of post-crisis financial sector reforms is lacking at the global level. Policy evaluation needs to be part of a structured policy process involving four steps: specifying the objectives of reforms, defining intermediate targets, calibrating instruments and assessing the expected impact, and assessing the impact post implementation. This is the gap that the FSB framework is about to close. It is about answering the question of whether the reforms have achieved their intended outcomes, whether they work together as intended, and whether they have had material unintended consequences. Such side effects may have to be addressed, but without compromising on the objectives of the reforms or by reducing resilience. The framework provides a common understanding of the elements required for a “good” policy evaluation and it will provide a basis for an informed and evidence-based discussion on regulatory policies. To address challenges of policy evaluation, she suggests investigating whether a reform caused an outcome (attribution), whether a reform had similar effects across markets and jurisdictions (heterogeneity), and whether it achieved its overall objective (general equilibrium).

     

    She also emphasized that both academics and policymakers would benefit from engaging in better policy evaluations. Academia could engage in developing methodologies and in studying designs that contribute to societal welfare, without compromising on academic rigor. Policymakers could draw on the rich expertise that is available and make better use of existing infrastructures. Moreover, some of the mechanisms that have been developed in academia to mitigate misaligned incentives and ensure transparency are readily applicable to policy evaluations. She said that policy evaluation means being transparent about the goals of regulatory policies and what these policies have actually achieved. Setting standards, learning from good practices, and international coordination are also vital. The FSB, in coordination with international standard setting bodies, can play an important role in this regard. "Its proposal for a framework for policy evaluation comes at the right time and addresses the right issues." Finally, she also looked at the need for independent, objective assessments to obtain an unbiased picture on the effects of reforms, highlighting that appropriate institutional arrangements such as peer reviews, independence from policy groups, and direct reporting lines need to be in place.

     

    Related Link: Speech (PDF)

    She discussed the proposed framework of FSB for evaluating financial reforms and highlighted that an effective framework for evaluation of post-crisis financial sector reforms is lacking at the global level. Policy evaluation needs to be part of a structured policy process involving four steps: specifying the objectives of reforms, defining intermediate targets, calibrating instruments and assessing the expected impact, and assessing the impact post implementation. This is the gap that the FSB framework is about to close. It is about answering the question of whether the reforms have achieved their intended outcomes, whether they work together as intended, and whether they have had material unintended consequences. Such side effects may have to be addressed, but without compromising on the objectives of the reforms or by reducing resilience. The framework provides a common understanding of the elements required for a “good” policy evaluation and it will provide a basis for an informed and evidence-based discussion on regulatory policies. To address challenges of policy evaluation, she suggests investigating whether a reform caused an outcome (attribution), whether a reform had similar effects across markets and jurisdictions (heterogeneity), and whether it achieved its overall objective (general equilibrium).

     

    She also emphasized that both academics and policymakers would benefit from engaging in better policy evaluations. Academia could engage in developing methodologies and in studying designs that contribute to societal welfare, without compromising on academic rigor. Policymakers could draw on the rich expertise that is available and make better use of existing infrastructures. Moreover, some of the mechanisms that have been developed in academia to mitigate misaligned incentives and ensure transparency are readily applicable to policy evaluations. She said that policy evaluation means being transparent about the goals of regulatory policies and what these policies have actually achieved. Setting standards, learning from good practices, and international coordination are also vital. The FSB, in coordination with international standard setting bodies, can play an important role in this regard. "Its proposal for a framework for policy evaluation comes at the right time and addresses the right issues." Finally, she also looked at the need for independent, objective assessments to obtain an unbiased picture on the effects of reforms, highlighting that appropriate institutional arrangements such as peer reviews, independence from policy groups, and direct reporting lines need to be in place.

     

    Related Link: Speech (PDF)

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