Financial Regulation’s Overlooked Networks
David Zaring
Presentation at HKU Conference on
International Financial Regulation
12/12-14/13
Overview
• The Agencification of International Financial Regulation
Structure
Principle
• The Role of Other Networks
Standard providers to the FSB
Members seeking cross-border regulatory values
• Motivation:
Develop the schematic of IFR
Shine light on overlooked networks
The Financial Stability Board & G20 – The Middle and Top
Tiers of A Global Agencified Institution
G20
•“The success of our coordinated effort to respond to the recent crisis have increased the case for more sustained and systematic international cooperation,”
• G-20, Communique, Pittsburgh Heads of State Summit, Sep. 25, 2009, available at http://www.ft.com/intl/cms/s/0/5378959c-aa1d-11de-a3ce-00144feabdc0.html#axzz1nQaI4ZhL.
FSB
•Strong regulation
•Harmonization
•Early Warning
•The FSB Charter:
“promote financial stability by developing strong regulatory, supervisory, and other policies.”
“not intended to create any legal rights or obligations.”
“fostering a level playing field through coherent implementation across sectors and jurisdictions.”
Networks: The Bottom Tier Embraces Procedural
and Substantive Regularity
1) a national treatment principle
2) a most favored nation principle
3) a preference for rulemaking over
adjudication
4) a subsidiarity principle of enforcement
5) a peer review model of enforcement
6) a network model of institutionalization.
The International Association of Deposit Insurers
• Deposit insurance: an intermittently used financial
stability tool
• After the financial crisis: the rise of deposit insurance
• The IADI – a network created to proseltyze a financial
regulatory product, and to offer best practices, bolstered
by some peer review, to encourage a particular adaption
of that product.
.
International Association of Deposit Insurers
Working to develop functional standards for varying jurisdictions
Figure: Cross-country comparison of coverage levels at end-2010 (% of total deposits, fully covered
depositors, and fully covered eligible deposit accounts)
*Bars not shown are not available
International Auditing and Assurance Standards Board
• A network concerned with gatekeepers and ethical
standards
• Increasingly important, given the internationalization of
accounting
• Adopting standard public administrative law procedures –
like many networks
International Auditing and Assurance Standards Board
The principles the different factors that impact audit quality
International Auditing and Assurance Standards Board
Structure of Pronouncements Issued by the IAASB
Financial Action Task Force
• Overlooked only as a model of financial stability
• Principles plus regulation
• Strong embrace of peer review as enforcement
mechanism
Financial Task Force on Money Laundering
Mutual evaluation for membership based on most recent
Recommendations
MER = Mutual Evaluation Report
Financial Task Force on Money Laundering
Ranking of countries in
compliance with standards
may be surprising
*Date in brackets represent year of
latest FATF peer review
Internatiional Accounting Standards Board
• Accounting as an ur-case for harmonization
• The Board as a geopolitical instrument
• Accounting’s bureaucratic organization
International Accounting Standards Board
IFRS Adoption Timeline
http://www.adoptifrs.org/ad
optiontimeline.aspx
Committee on Payment and Settlement Systems
• Payments: the respected recourse of the financial
regulator
• The CPSS as Basel adjunct