Understanding the Global Regulatory Process
Edited by Francesca Bignami and David Zaring
Chapter 19: The emerging post-crisis paradigm for international financial regulation
“The success of our coordinated effort to respond to the recent crisis has increased the case for more sustained and systematic international cooperation,” the heads of state of 20 of the world’s largest economies declared in 2009, in the wake of global market turmoil and recession (G-20, 2009a). And, in international financial regulation, at least, cooperate they have, in a manner that has been resolutely international, increasingly institutionalized, legally tractable, but, above all, informal. That is, the cooperation has been institutionalized without quite ever meeting the traditional standards of public international law. Instead, international financial regulation has been reformed and constructed as an increasingly elaborate epitome of governance by so-called soft law institutions. There has been almost no effort to devise a treaty on financial regulation that might help states and their financial overseers understand their new responsibilities and obligations to one another. Indeed, it appears that there may never be such an instrument. Nonetheless, there is an emergent order, one that has devised an increasingly coherent set of rules—coherent, even, as a matter of legal analysis. The transformation of international financial regulation thus may mark the creation point of a new approach to international governance. The old efforts to deal with the cross-border externalities of finance, which were siloed and limited in their ambitions, have been cast aside in the wake of the financial crisis. In their place, a new order is emerging. That order is hierarchical, procedurally regular, and politically supervised.
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