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International coordination of financial supervision: why has it grown? Will it be sustained?

Richard John Herring (Department of Finance, The Wharton School, University of Pennsylvania , Philadelphia, Pennsylvania, USA)

Journal of Financial Economic Policy

ISSN: 1757-6385

Article publication date: 29 June 2018

Issue publication date: 21 August 2018

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Abstract

Purpose

This article reviews the history of international coordination in the supervision of financial institutions noting why cooperation developed first and has been most extensive in oversight of banks relative to securities firms and insurance companies. It also poses the question of whether the extent of international coordination can be sustained or may even diminish.

Design/methodology/approach

The history of international coordination is used to illustrate the hypotheses that cooperation is more likely: the broader the international consensus on policy objectives and the potential gains from cooperation, the wider the international consensus on policy objectives and the potential gains from cooperation, the deeper the international agreement on the probable consequences of policy alternatives, the stronger the international institutional infrastructure for decision-making and the greater the domestic influence of experts who share a common understanding of a problem and its solutions.

Findings

All five of these factors that have enabled deepening and broadening of international cooperation have diminished in strength so that international cooperation is not likely to expand and may even be in retreat.

Originality/value

This article clarifies the factors that facilitate international cooperation and highlights the key obstacles to sustaining international cooperation.

Keywords

Acknowledgements

The author’s presentation at the Chapman conference entitled “Making Bankruptcy Work: Living Wills & the Liquidity Challenge” is available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3048513. This paper takes a broader perspective on international regulatory cooperation and its history.

Citation

Herring, R.J. (2018), "International coordination of financial supervision: why has it grown? Will it be sustained?", Journal of Financial Economic Policy, Vol. 10 No. 2, pp. 213-236. https://doi.org/10.1108/JFEP-10-2017-0098

Publisher

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Emerald Publishing Limited

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