Can Financial Markets be Controlled?

The Global Financial Crisis overturned decades of received wisdomon how financial markets work, and how best to keep them in check.Since then a wave of reform and re-regulation has crashed overbanks and markets. Financial firms are regulated as neverbefore. But have these measures been successful, and do they go farenough? In this smart new polemic, former central banker andfinancial regulator, Howard Davies, responds with a resounding no . The problems at the heart of the financial crisisremain. There is still no effective co-ordination of internationalmonetary policy. The financial sector is still too big and,far from protecting the economy and the tax payer, recentgovernment legislation is exposing both to even greater risk. To address these key challenges, Davies offers a radicalalternative manifesto of reforms to restore market discipline andcreate a safer economic future for us all.

Sir Howard Davies currently teaches courses on the regulation offinancial markets at Sciences Po. He is the former director of theLondon School of Economics, and the ex-chairman of the UK sFinancial Services Authority. He is the author of a numebr of booksand writes regularly for the Financial Times.

"Howard Davies accomplishes three striking feats in this remarkable book. He makes common sense of the large and technical literature on financial regulation. He warns against complacency in terms that will make even the most jaded reader sit up and listen. And he does so in an entertaining way. Who knew that thinking about financial reform could be fun?" Barry Eichengreen, University of California, Berkeley

"Nobody is better placed than Howard Davies to describe the evolution of the financial system during and after the crisis, and to answer the central question of whether financial markets can ever be controlled and future crises prevented." David Smith, Economics Editor, The Sunday Times.

"Howard Davies brings three things which are all to rare to studies of the financial world - a complete understanding of how the system works; a healthy scepticism as to the motives and competences of its major actors; and an ability to write with clarity and wit. Read this for a scary analysis of how the tidal wave of reform is not enough to stop things going even more disastrously wrong next time, and what needs be done now to prevent this." Anthony Hilton, Financial Editor Evening Standard

"As a former top regulator and as a board member and adviser to large financial institutions, no one is better qualified than Howard Davies to explain the causes of the global financial crisis and assess the reforms that have followed. His short well written book does both. His conclusion is a sobering one: despite complex and costly reforms, financial regulators have failed to address the structural forces that triggered the crisis." Laura Tyson, Haas School of Business, University of California, Berkeley

"Howard Davies has written a lively and highly readable response to the crucial question "Can financial markets be controlled?" His answer combines insights into both the big picture drivers of instability and the details of the world's imperfect policy response. An excellent primer on still unresolved issues, it rightly