Yet as we are seeing, there are immense difficulties in agreeing what good financial regulation entails. Perhaps this is not surprising. After all, it was not too long ago that the systems in advanced countries were considered “best practices”, which Emerging Market Economies (EMEs) were advised to emulate.
So, we now need some fundamental research into what good regulation really entails, and this research would do well to consider our total experience – not just that of advanced economies but also of EMEs. 8. Consider now a more complex case, where there are both positive and negative spillovers to analyse. A prominent example is the second round of US quantitative easing, QE2.