Following the financial crash of 2008, the so-called Volcker rule provisions aimed at curbing conflicts of interest and free speculation in the financial industry were included in a watered-down version in the US Dodd-Frank financial reform bill of 2010, in sections 619-621, but were only properly regulated last month, and are expected to fully enter into force not before July 2015.
In Europe, the pace has been considerably slower still. According to the Financial Times (2014.01.05) analysing a leaked proposal of the European Commission with a "narrowly defined version of the US Volcker rule" the official calendar expects an agreement no sooner than December 2015, the dates of its real implementation being anyone's guess.
Conceptually, the issue seems clear, as the Volcker rule is no more than an update of the Glass-Steagall Act of 1933 and both seem reasonable, essential and urgent ways of curbing the unchecked and unbound power of the financial industry and the risks that come with it.
Actually, no one really argues to the contrary, but procrastination seems to be the result of a very effective lobby from the industry coupled with the pressure coming from the way things have evolved on the ground.
Whereas most observers correctly see the present economic crisis as the result of unchecked growth of economic imbalances in direct relation with unrestricted financial power to fuel them, few have a comprehensive approach of how to change the present state of play, losing their energies in fruitless arguments on public accounts, trading disputes or migration pressures.
Otherwise, traditional monetary policy has been the only effective tool in combatting depression. In the eyes of some observers we have been trying to cure our serious hang-over of loose monetary-financial drunkenness of the early XXIst century by a reinforced dose of new alcoholic beverages; whereas others pragmatically counter-argue that the present loose monetary policy has avoided depression and that stepping back from it would necessarily imply an economic disaster.
Central banks stand firm on the monetarist inspired "Washington consensus" that drove them since the 1970s, looking at "inflation" (the behaviour of consumer prices index) as the only real concern; the deflationary pressure justifying the present loose monetary policy.
Is there a way to untangle this state of affairs?
The first thing we should observe is that the present loose monetary policy has had an enormous impact on the financial assets prices indexes and a very modest or negligible impact on consumer prices indexes.
This is the phenomenon being widely described as the divorce of "Wall Street" from "Main Street". The divorce has not been complete, and strong indirect links remain between both realities. I would rather depict it as a watering can that is used to pour most of its water on to a target plant and is now pouring most of it elsewhere.
And why is it happening that way? I think that it is for lack of control of where the water is really flowing to, that is, for lack of targeting the intended objective, in other words, for the lack of application of rules preventing the financial World to act on its own behalf rather than on behalf of the economy it is supposed to service.
The second issue we should bear in mind is the need to combat global economic imbalances that go hand in hand with the financial excesses. As the founding fathers of the Bretton Woods institutions correctly perceived, sustainable economic equilibria in international relations is a condition for stable economic and ultimately peaceful relations at the World stage.
As the extremely important October the 30th semi-annual report of the US Department of the Treasury "on International Economic and Exchange Rate Policies" remarks: the massive and growing German economic trade surplus is not only the main cause for the unbearable unemployment rate in European peripheral economies, jeopardising European economic equilibrium; it is also a major threat to international economic stability and development.
The third and final issue is the need for an income distribution re-equilibrium, both at the internal national level and the international level. The concentration of money on the financial industry has widely contributed to the increasing inequalities in income distribution. Extreme inequality in sharing financial means prevents demand to develop in a sustainable way.
In our view, for tackling these issues, it will be necessary to go further than returning to the Glass-Steagall Act of 1933. We will have to rethink the way we have been looking at money and money creation; the relation between the monetary and the non-monetary authorities in our democracies and certainly a new world cooperation architecture that goes beyond the loose ground left by the collapse of the Bretton-Woods framework.
Here, Europe could become a good experimental play-ground.