How can the world avoid repetition of the catastrophic financial instability currently plaguing the global economy? With the aim of restoring a strong framework for economic governance, this study proposes new rules of the game - imposed through the Group of 20 and the IMF - for the macroeconomic and exchange rate policies of the main players, including the United States.The authors advocate stricter prudential rules for banks, centered around the introduction of a simple leverage ratio calculated with reference to total assets, with no exemptions or risk mitigation. The book warns against the risk of a massive wave of new regulation that is not needed and might cripple capital markets for years, calling instead for a simplification and a better enforcement of rules. In short, the message, as reflected in the title, is: 'Keep it simple'.
Carmine Di Noia is deputy director general of Assonime and a member of the European Securities Markets Expert Group (ESME) at the European Commission.Stefano Micossi is director general of Assonime, a professor at the College of Europe, and a member of the CEPS board of directors.Jacopo Carmassi is a researcher at Assonime and a fellow of the Wharton Financial Institutions Center.Fabrizia Peirce is an economist in Assonime's economic unit.