For many years, the banking industry has required close supervision owing to its central yet delicate role in economic life. In a short time, the business has moved from a local, country‐based jurisdiction to a global arena, on a massive scale. This development has forced regulation to adopt an international perspective, to keep in step with the commercial developments. This paper analyses this move from local to global regulation of banking, finding that the efforts seem to be reactive rather than proactive. In addition, the regulatory endeavours have become enmeshed in international economic competition, and sophisticated regulatory arbitrage is being conducted on a global playing field. Thus, regulatory objectives and standards are being increasingly compromised or subverted. Paradoxically, just as the banking business is becoming increasingly risky and scandalous, regulation is becoming weaker, posing serious challenges to the future of the world economy and society.
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