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Architects of stability? International cooperation among financial supervisors

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  • Ethan B Kapstein

    (INSEAD - Economics, Political Sciences)

Abstract

The objective of this paper is to provide a balanced assessment of international cooperation among financial regulators, with a focus on banking supervision. While recognizing the undeniable – and even unexpected – achievements of these regulators in building a cooperative framework for financial supervision, we also suggest that this remains a work in progress, given the contemporary financial risk environment. Briefly, we argue that this environment – to the extent we understand it, for it remains opaque in important respects – has an almost paradoxical quality, in that risk has become both more consolidated and more atomized at the same time. On the one hand, large and complex financial institutions (LCFIs) which may be "too big to fail", increasingly dominate the banking landscape; on the other, these same institutions have shifted at least a portion of their risks onto other firms and households, whose absorptive capacity has yet to be severely tested. It is the effectiveness of the international supervisory architecture in the face of this risk environment that we consider, and we then provide some suggestions for future policy reforms.

Suggested Citation

  • Ethan B Kapstein, 2006. "Architects of stability? International cooperation among financial supervisors," BIS Working Papers 199, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:199
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    References listed on IDEAS

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    1. De Bandt, Olivier & Hartmann, Philipp, 2000. "Systemic risk: A survey," Working Paper Series 35, European Central Bank.
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    6. Peltzman, Sam, 1976. "Toward a More General Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 211-240, August.
    7. William R. White, 1996. "International agreements in the area of banking and finance: accomplishments and outstanding issues," BIS Working Papers 38, Bank for International Settlements.
    8. Oatley, Thomas & Nabors, Robert, 1998. "Redistributive Cooperation: Market Failure, Wealth Transfers, and the Basle Accord," International Organization, Cambridge University Press, vol. 52(1), pages 35-54, January.
    9. Mr. Dewitt D Marston, 2001. "Financial System Standards and Financial Stability: The Case of the Basel Core Principles," IMF Working Papers 2001/062, International Monetary Fund.
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    Cited by:

    1. Hyoung‐Kyu Chey, 2007. "Do markets enhance convergence on international standards? The case of financial regulation," Regulation & Governance, John Wiley & Sons, vol. 1(4), pages 295-311, December.
    2. Vítor Gaspar, 2010. "Financial Stability and Policy Cooperation," Working Papers o201001, Banco de Portugal, Economics and Research Department.
    3. Anastasia Nesvetailova, 2012. "Liquidity Illusions in the Global Financial Architecture," Chapters, in: Kern Alexander & Rahul Dhumale (ed.), Research Handbook on International Financial Regulation, chapter 15, Edward Elgar Publishing.
    4. Malgorzata Olszak, 2012. "Macroprudential policy - aim, instruments and institutional architecture (Polityka ostroznosciowa w ujêciu makro - cel, instrumenty i architektura instytucjonalna)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 10(39), pages 7-32.
    5. Pistor Katharina, 2012. "Governing Interdependent Financial Systems: Lessons from the Vienna Initiative," Journal of Globalization and Development, De Gruyter, vol. 2(2), pages 1-25, January.
    6. Lejot , Paul & Arner, Douglas & Schou-Zibell, Lotte, 2008. "Securitization in East Asia," Working Papers on Regional Economic Integration 12, Asian Development Bank.

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    More about this item

    Keywords

    international cooperation; central banks; financial stability; regulation; banking supervision;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G3 - Financial Economics - - Corporate Finance and Governance
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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