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“Having uniform regulation without uniform supervision is like having a lighthouse and not switching it on.”
International banking regulation provides a telling test case for assessing the effectiveness and adequacy of international regulatory coordination. It functions through setting common non-mandatory standards, whose implementation is subject to external monitoring. Despite having been so far fairly effective in harmonising bank solvency and liquidity standards, international coordination in this field was not effective in reaching adequate regulatory standards, resulting in a regulatory regime that is too vulnerable to disruptions emanating from outsiders.
This analysis results from the seminar on the ‘Governance of international banking’, organised with the EUI’s Florence School of Banking and Finance and Bocconi University in Milan:
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The 1970s marked a turning point in global governance. Mounting international challenges led to the establishment of new top-level institutions, an expansion of the multilateral trade regime, and a consolidation of the international financial system. This seminar highlighted that underlying governance norms that emerged then have held until now, but new geopolitical and geoeconomical challenges may yet upend them. Read more