Financial regulation and the G20

My new column for the FT discusses priorities for the G20 in Pittsburgh. The focus should be on financial regulation.

If Mr Geithner's proposals are acted on, the global financial system will be far better protected in future. This week's summit will not budge fiscal policy, least of all in the US. All the talk about exit strategies - when and under what conditions to start withdrawing stimulus - is so much wasted breath. But bank regulation better had be strengthened, and in a closely co-ordinated way, or else governments will be leaving their countries as exposed as before to the risk of another financial crisis.

The global finance industry is in no position, yet, to mount a vigorous campaign against changes which, if they are adequate, will implicitly tax its growth. That is what higher capital requirements would do, and is precisely why they are needed. Checking the industry's expansion must be seen as an aim of policy, not an unintended consequence.