Journal opinion article Essay Example | Topics and Well Written Essays - 500 words - 4

Journal opinion article - Essay Example The article is found in the Wall Street Journal of March 23, 2015. According to the former U.S. Federal Reserve Chairman Ben Bernanke, â€Å"Efforts to strengthen regulatory oversight of financial institutions in the U.S. following the 2008 debacle should make future crises less likely to occur, or less severe if they do.† The main argument presented here is that the possibility of future crises cannot be ruled out. As such, mitigation measures like regulation of the financial sectors can help prevent the occurrence of a similar situation. Bernanke suggests that â€Å"Steps such as submitting large banks to Fed stress tests to assess risk should lessen the likelihood of another crisis or soften the broader economic impact should one occur† (Amy). Therefore, to a large extent, it is a noble idea to regulate the activities of the financial sector in order to ensure that a similar crisis does not occur in the future. Theoretically, regulation of the financial sector has its pros and cons. According to Harrison (208), borrowing from the banking system leads directly to an increase in interest rates and the Treasury Bills are likely to increase. This scenario has spiral effects on the performance of the economy. An increase in interest rates implies that the money supply will shrink resulting in less disposable income circulating among the people. Such conditions are likely to lead to the occurrence of financial crises and this is the reason why regulation of the financial sector is seen as a noble idea that can be implemented to reduce the chances of the same situation from happening again. However, regulation of the financial sector has got its own problems. A market economy should function freely and any form of regulation may gag the independence of the sector. Negative results are likely to be experienced and these may