WP 2 : Financial markets and international regulation

The task in relation to financial markets and international regulation is to clarify the interconnection between financial market regulation, evolution of market structures, price movements in financial markets, portfolio behaviour and the impact of these developments in other domains.

Questions to be addressed include the historical and future role of the US dollar, Euro and other major currencies, having regard to the scale of financial flows between the USA, Europe and other regions and the impact of exchange rate volatility when financial systems and capital markets are integrated. Specific issues in this domain include interrelationships between rules for the conduct of monetary policy and government finance, price movements (exchange rates, stock market indexes and interest rates), wealth effects (asset valuations and portfolio adjustment), impacts on trade and investment and macro-economic outcomes (growth of aggregate demand and inflation). Local developments with global consequences such as fiscal havens and criminal traffic have also to be considered for their direct (distortion) and indirect (dissuasion) impacts.