Adaptation and resilience in global financial regulation

Abstract

The global credit crisis of 2008 has demonstrated beyond any doubt that pre-existing international arrangements were insufficient to preserve stability in the global financial system, resulting in the most serious global economic and financial crisis since the Great Depression. This article examines the agenda being pursued through the Group of 20 (G-20), Financial Stability Board (FSB) and related organizations to reform international financial regulation in the wake of the global financial crisis, focusing on whether the international regulatory agenda in fact addresses the fundamental sources of systemic risk underlying the global crisis. In addressing this question, the article begins by suggesting the basic elements of a financial regulatory system to effectively address systemic risk, arguing that in each case, the global financial crisis has highlighted specific failures of the pre-crisis regulatory approach, then provides an overview and analysis of international responses to the global financial crisis, focusing on the G-20 and FSB. The article concludes, arguing that, while much has been achieved to date, the post-crisis international regulatory reforms that have been agreed would not have prevented the global financial crisis nor are sufficient to lay the foundations for future global financial stability.