Social Democratic Principles: Towards a New Financial Architecture

In this paper, J. Stiglitz, after having presented his views on the dysfunctions of the […]

Policy Study

09/10/2014

In this paper, J. Stiglitz, after having presented his views on the dysfunctions of the financial markets, details what should be the goals and the operative framework for a New Financial Architecture. After having stated that financial markets are “not an end in themselves” and that their monitoring should be understood as a “public good”, a “public responsibility”, J. Stiglitz proposes in order to align private rewards to social returns, to act through a regulation of the incentives at the financial level. Among others, it would seem useful to base bonuses “on performance over at least five years period”, to require “that mortgage originators retain at least a 20% equity share” and to implement a “Government rating agency”.  From a practical point of view, J. Stiglitz proposes first, to proscribe “variable rate mortgages in which payments can vary significantly”, second, to limit the “speed of expansion of assets” and, third, to prohibit the purchase or the production of derivatives and financial products by highly regulated entities “unless they have been approved for specific uses by financial products safety commission (FPSC)”. However, J. Stiglitz seems aware of the increasing facilities with which financial institutions can beat the game and suggests that it should exist a “sufficient authority to proscribe such behavior”. Finally, J. Stiglitz calls for more democracy in the monitoring of the economy by suggesting that “those who are affected by the failure of regulation should have a large voice in any regulatory structure”.

Find all related publications
Publications
21/11/2022

The EU and North Africa: Towards a just Twin Transition?

In an era marked by a deficiency in sustainable growth and a profusion of novel […]
08/11/2022

Building resilient democracies

Challenges and solutions across the globe
23/10/2022

The EU and gender equality

FEPS Primers Series - Agnes Hubert
23/10/2022

The progressive potential of the EU

FEPS Primers Series - Richard Corbett
Find all related news
News
15/11/2022

FEPS delegation at COP27

FEPS delegation was present at COP27, with the strategic objectives of mobilizing climate finance for […]
20/10/2022

Europe’s largest Gen Z-focused research ever conducted

The Foundation for European Progressive Studies (FEPS) and ThinkYoung have conducted, over 3 years, Europe’s […]
18/10/2022

Open letter to call for a deep reform of the EU fiscal rules

FEPS cosigned an open letter to EU leaders calling for them to address the underlying structural […]
23/09/2022

FEPS President in the United Nations General Assembly

During the UNGA 77 week in New York, FEPS is expanding its global partnership. Among […]
Find all related in the media
In the media

El PSC se reunirá de nuevo con el Govern el miércoles por los Presupuestos

by EuropaPress 24/11/2022
EuropaPress echoes the 'Twin Transition' event in Barcelona, organized by FEPS and Fundació Campalans, with the participation of Salvador Illa and FEPS President Maria João Rodrigues.

A baloldal főutcája

by Népszava 21/11/2022
Article by FEPS Secretary General László Andor on the state of social democracy after the PES congress - “The main street of the left”

La doble transición verde y digital como arma contra los depredadores de la energía

by Crónica Global 18/11/2022
Article by Pau Solanilla, Director of Fundació Rafael Campalans, ahead of the FEPS-Campalans event 'Figuring out the Twin Transition'

El reto de las Smart Cities, combinar digitalización y sostenibilidad

by ABC 18/11/2022
Article by Pau Solanilla, Director of Fundació Rafael Campalans, ahead of the FEPS-Campalans event 'Figuring out the Twin Transition'