The collapse of Lehman Brothers in September 2008 will be remembered in the annals of the global financial sector. This resounding event sent shockwaves around the planet, triggering a banking and financial crisis on a scale not seen since the dramatic stock market crash of 1929 and the Great Depression of the 1930s. Even worse, this first crisis of the new millennium spread to the real economy and caused a recession in most industrialised countries.

At the time, the exuberance (i.e. risk-taking) of financial actors, the complexity and sophistication of the instruments used and the lack of transparency in derivatives trading (considered to be complicated and opaque) had been widely criticised by regulators (G20 Finance Ministers, central banks etc.).

To remedy the situation and bring more regulation to the financial sector – after the great waves of deregulation of the previous two decades – new rules have been introduced. Among the most emblematic are the increase in regulatory capital requirements for large banks, counter-cyclical buffers and the clearing of OTC trading in derivatives.

Now that the current financial sector has grown to a gigantic size and involves numerous risks due to the global economic situation (inflation and the sudden rise in interest rates, climate change, etc.), it is both important and useful to make a scientific assessment of the regulations put in place after the 2008 crisis.

Such an assessment is undertaken in this new issue of the Opinions & Débats series. The three authors, Gabrielle Demange, Thibaut Piquard and Guillaume Vuillemey have evaluated the main reforms introduced since 2009, such as central clearing, collateral trading and transaction reporting to regulators. Many issues are addressed. Have the regulations been successful? What are their possible shortcomings? In what respects could the financial markets be improved?

These are important questions for the stakeholders of the Institut Louis Bachelier – which was created after 2008 to provide academic answers and recommendations to the financial sector – comprising academics, practitioners and the public authorities via regulators.

Enjoy your reading!

Jean-Michel Beacco, Delegate General of the Institut Louis Bachelier