Policy responses to systemic risk. National policies and the idea of global financial governance.

• Applicant: Professor Dr. Helmut Willke (†)
• Subject Area: Political Science
• Term: from 2011 to 2015
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 211015359

The project examines the capacities of nation states to regulate systemic risks fueling contagious fi-nancial crises. The core assumption of the research is that the global financial crisis has had its roots as much in market failures as in state failures, i.e. that failures of political governance and regulation have been crucial factors in causing this crisis, and may be so in future ones. The core hypothesis of the project is that political governance of global finance is exceedingly difficult and complex because of the constitutive dilemma of global governance – an incongruence between a globalized economic and financial system on the one hand and nationally limited political systems of governance on the other. This mismatch puts political regulation at a disadvantage, in particular in regard to an overall factor which cannot be limited to a specific nation state, i.e. systemic risk. The challenge is to improve the nation states‘ capacity to act in a coordinated and strategic way in relation to the dynamics of the global financial system, and to define institutional frameworks for transnational political regulations. Systemic risk is a highly controversial and still neglected aspect of the financial crisis. It includes the topics of ― too big to fail‖ and ― systemically important institutions‖. Putting systemic risk at the center of the project in a governance and regulation perspective will shed a new light on the options of political systems to cope with crises which transcend their boundaries and which demand transnational cooperation. Focal points will be the proceedings of the Basel Committee on Banking Supervision (BCBS) (specifically: agenda setting and implementation of Basel III) and the proceedings of the Financial Stability Board (FSB) at the global level, and the policies of the systemic risk oversight councils of USA and EU at the national/transnational level.

• DFG Programme: Research Grants