East Asian Economic Integration

East Asian Economic Integration

Law, Trade and Finance

Asian Commercial, Financial and Economic Law and Policy series

Edited by Ross P. Buckley, Richard Weixing Hu and Douglas W. Arner

This book analyses recent developments and likely future paths for trade and financial integration in East Asia. It suggests a more coherent, balanced way forward for regional economic integration and analyses implications for institution building in East Asia.

Chapter 9: Global Financial Regulatory Reforms: Implications for East Asia

Douglas W. Arner and Cyn-Young Park

Subjects: asian studies, asian economics, asian law, economics and finance, asian economics, international economics, law - academic, asian law, international economic law, trade law

Extract

Douglas W. Arner and Cyn-Young Park INTRODUCTION The global financial and economic crisis that started in 2007 highlighted gaps and weaknesses in the current international financial architecture as well as national regulatory systems. Two major shortcomings in the modern global financial system have shaped an array of possible regulatory, supervisory, and prudential reforms. First, supervisors failed to limit excessive risk-taking and leverage by financial institutions. Market failures, due in part to rapid financial innovation, discredited the regulatory model that relied on transparency, disclosure, and market discipline to curb inordinate risk. Second, the absence of well-established crisis management mechanisms both locally and internationally – revealed in the failure to quickly address impaired financial institutions – sapped confidence in the system. Against this backdrop, the objective of global regulatory reform is to build a resilient global financial system that can withstand shocks and dampen, rather than amplify, their effects on the real economy. The goal is to ultimately support vibrant economic activity and growth.1 There is broad agreement on the key principles of reform – bolstering macroprudential supervision to reduce procyclicality and guard against a build-up of systemic risk, extending the regulatory perimeter to include all systemically important financial institutions, improving international financial standards, and strengthening crisis resolution mechanisms. Lessons drawn from the recent crisis have led to specific reform proposals with concrete implementation plans at the international level. Leaders 1 See G-20, The G-20 Toronto Summit Declaration (June 2010); G-20, Leaders’ Statement: The Pittsburgh Summit (September 2009); G-20, Leaders’ Statement – ‘The Global Plan for...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information