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Why simple and robust regulation is the way to reduce financial complexity

Much of the complexity of modern finance is the result of regulatory arbitrage – avoiding or minimising restrictions by engaging in a transaction with more or less identical effect but more favourable regulatory treatment. Many regulators still cling to the hope that it could be eliminated if only rules were sufficiently extensive and sufficiently carefully prescribed. But this is an illusion.

Competition in banking does not necessarily benefit consumers

Limited competition may actually yield worse results for customers than either full-blooded competition or a cartel. Perhaps that explains the particularly tentative approach of the Competition and Markets Authority.

How the health and safety culture can curb moral hazard

What does the death rate from violent accident in England over seven centuries tell us about moral hazard in the financial system?

Why banking crises happen in America but not in Canada

John contrasts Timothy Geithner’s firefighting approach to financial crises with the analysis of their political origins of Calomiris and Haber in Fragile by Design

Taxi apps should be hailed for breaking the cabby cartel

Taxi licensing illustrates regulatory capture, the phenomenon by which regulation intended to serve the public is hijacked by industry interests.

Do not criminalise traders just for being in the know

Obtaining better information about companies is essential to the efficiency of markets and society: obtaining it fractionally earlier is of no public value at all.

Is it better to play it safe or to place bets that risk bankruptcy?

Although transactions with low probability of large loss and high probability of small gain carry the potential for disaster, they can appear attractive for a very long time – perhaps for ever.

The design flaws that lead to financial explosions

Nuclear power and financial systems both have the capacity to blow up the world. Perhaps there are lessons from one for the other.

To secure stability, treat finance and fast food alike

If I had a million pounds for every time I have heard a possible reform opposed because “it wouldn’t have prevented Northern Rock or Lehman Brothers going bust”, I might now have enough money to bail out a bank.

Why I ignore Apple’s silly reams of terms and conditions

My decision not to read the terms of agreement when purchasing a new television is not the result of my stupidity and ignorance, but my wisdom.