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
- TWO WEEKS FREE.
- Cancel any time.
- After two weeks, just $11.99 monthly or $94.99/year.
Request a free trial for your office or school. Everyone at a given site can get access through our institutional subscriptions.
- Late August Publishing Hiatus
- Diplomatic Fallout: Why the International System Is Still Worth Fighting For
- BRICS Bank Will Bolster, Not Challenge, Global Financial System
- The Realist Prism: Syria, Ukraine May Force Obama to Learn to Love Coalitions of the Willing
- Diplomatic Fallout: West Needs New Rules to Contain Proxy Wars With Russia