S. International Banking and Finance: The Challenges

A global pandemic. Soaring sovereign debt. Huge budget deficits. Credit problems. Equity markets crashing and rebounding. In just two years, risks associated with financial markets have exploded, provoking a massive dislocation of assets and liabilities across the private and public sectors and threatening financial stability in both advanced and emerging economies. And despite some optimism (e.g., improving COVID-19 conditions), massive stimulus actions and quantitative easing by central banks continue.
While financial risks are nothing new, understanding the way in which they have evolved is critical. Thirteen years after the Great Recession and global financial crisis, the risks taken by governments, central banks, banks, insurance companies, and capital markets have changed. What have we learned from these evolutions? How has the continuing COVID-19 crisis exacerbated risks to global financial markets risks? How effective has the new wave of regulations been in easing financial concerns related to the global lockdown? Who will foot the bill of these massive costs?
Over the course of thirteen weeks, this course will explore (i) the purposes of financial regulations; (ii) foundational principles of banking and insurance; (iii) central banks and other regulatory and supervisory authorities; (iv) sovereign debt; (v) risk management and regulation; (vi) insurance and solvency; (vii) banking ratios and the uniform application of global financial regulations; (viii) climate change and challenges to financing the energy transition; (ix) shadow banking and securitization; (x) the future of global markets after Brexit; (xi) governance, culture, and conduct in the financial industry, including the impact of financial markets on increasing inequality; (xii) the regulation of financial innovations such as electronic payment systems and cryptocurrencies; and (xiii) other new developments in financial regulation. Course sessions will include lectures, student presentations, and guest speakers.
Risks to the global financial sector can only be addressed if those who propagate them do not deny them. Today, the optimism of the equity markets is fueled by public money and a refusal to address the risks of a debt explosion on a global scale. Does the current system of financial regulation address only yesterday’s risks rather than those of today and tomorrow?
In addressing this question and more, this class seeks to improve students’ understanding of international banking and finance and provide them with the background necessary to discuss recent issues in financial regulation.
Students will be evaluated based on individual class presentations offered during the final ten weeks of the course as well as a final essay on a narrow topic of their choice relevant to the course.