Writing for the Financial Times, George Soros added his own advice on how to best reform the financial system alongside the outlined proposal that came out of the Obama administration. While agreeing with those proposed, he deemed them inadequate. He writes:
The Obama administration is expected on Wednesday to propose a reorganisation of the way we regulate financial markets. I am not an advocate of too much regulation. Having gone too far in deregulating – which contributed to the current crisis – we must resist the temptation to go too far in the opposite direction. While markets are imperfect, regulators are even more so. Not only are they human, they are also bureaucratic and subject to political influences, therefore regulations should be kept to a minimum.
And his three suggestions revolve around the following:
- First, since markets are bubble-prone, regulators must accept responsibility for preventing bubbles from growing too big.
- Second, to control asset bubbles it is not enough to control the money supply; we must also control the availability of credit.
- Third, we must reconceptualise the meaning of market risk.*
Read his editorial and understand his thoughts via the Financial Times website HERE.
*He contested the theory behind the efficient market hypothesis.