The Economic Theory of Bank Regulation and the Redesign of Switzerland's Lenders of Last Resort Regime for the Twenty-First Century

This book will appeal to researchers, practitioners and policy makers and is offering the first valuable comprehensive economic theory of bank regulation. Moreover, the author critically analyses the Basel III accord and proposes a revision of the main regulatory measures - replacement of them with alternative proposals. However, neither of these proposals can definitively eliminate the risks associated with systemically important banks and the resultant problems in connection with emergency liquidity assistance by the lender of last resort, such as moral hazard and adverse selection. In other words, state guarantees that leads to unjustified market distortion cannot be excluded. Therefore, the author investigates the role of the Swiss lender of last resort in the UBS crisis of 2007 - 2009 and elaborates a substantive regime that should be more effective, timely, sustainable and credible than the current regime. Author: Dr. rer. pol. Antonios Koumbarakis