Observers looking for evidence of the importance of a sound international financial regulatory architecture in an age of financial globalization should look no further than the recent global financial crisis. The crisis laid bare the limitations of the global financial architecture that had emerged in a piecemeal fashion since the collapse of the Bretton Woods system in the early 1970s.
To begin with, the crisis demonstrated the inadequacy of the Basel Accords, which for three decades formed the core of the international banking regulatory regime. The Basel Committee of central bankers had spent the better part of the late 1990s and early 2000s renegotiating the original Basel I agreement, which set minimum capital requirements for international banks. The crisis has revealed the limitations of this agreement, and in particular of shifting part of the task of calculating capital charges on the banks’ own internal models and data, as the major international banks entered the crisis with only limited capital and excessive leverage. ...
To read the rest, sign up to try World Politics Review
Sign up for two weeks of free access with your credit card. Cancel any time during the free trial and you will be charged nothing.
Request a free trial for your office or school. Everyone at a given site can get access through our institutional subscriptions.
- Diplomatic Fallout: Can the U.N. Deliver for Obama on Iran, Israel-Palestine Deals?
- Diplomatic Fallout: U.S. to Europe: Don’t Go Soft on American-Led Global Order
- Global Insights: With Good Game Plan, U.S. Can Tough Out NPT Review Conference
- Diplomatic Fallout: At U.N., Russia Is Now the Indispensable Nation
- Strategic Horizons: Making Libya a U.N. Protectorate Would Be Wise but Impossible