It is said that 'generals fight the last war'. Regulators can do the same. The question is whether in the plethora of reforms that are being developed, the financial regulators are building the regulatory equivalent of the Maginot Line or whether they are devising strategies that will enable them to counter, or at the very least anticipate, the next crisis. The paper focuses on regulators’ capacities for anticipation rather than resilience per se. It argues that for these capacities to be developed, the current mechanisms by which the financial regulators learn of their own and each others’ performance need to be quite fundamentally reoriented and regulators need to build in stronger mechanisms for cognitive challenge. The paper analyses the cognitive shifts prompted by the crisis, and associated policy developments. It then considers the changes in organisational structures of financial regulation at the global and EU levels, linking those to the cognitive shifts identified, and focusing on current mechanisms of observation, communication, enforcement and coordination. In particular it examines how key actors are positioning themselves within the regulatory system as a whole and the modes of coordination they are developing. It then considers how the system’s existing and potential capacities for reflexive learning and dynamic responsiveness can be strengthened. It focuses on two elements of that challenge: building capacity through enhancing information and knowledge, both about what is happening outside the system in the markets and the performance of the regulatory system itself, and developing mechanisms of challenge
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.