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Global financial system reform: the Dodd‐Frank Act and the G20 agenda

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  • Daniel E. Nolle

Abstract

Purpose - The Dodd‐Frank Act of 2010 is the keystone policy response directed at reforming US financial system activities and oversight in the wake of the 2007‐2009 financial crisis. The USA also has financial system reform policy commitments in the international arena, including in particular by virtue of its membership in the G20. The purpose of this paper is to consider US policy initiatives related to a core dimension of financial system reform: risks posed by systemically important financial institutions (“SIFIs”). Design/methodology/approach - The paper provides a deta‘iled comparison of SIFI policy initiatives and timetables under both the Dodd‐Frank Act and the G20 agenda, as reflected in the ongoing work plan of the Financial Stability Board (FSB), and poses the question “Are US domestic and international financial system reform commitments in sync?” Findings - The study finds that, fundamentally, the answer is “yes.” However, the comparison yields two caveats with potential policy implications. First, the two agendas differ in their relative emphasis on the coverage of both banks and nonbanks. The G20/FSB focus, at least over the near‐term, is bank‐centric compared with the Dodd‐Frank Act, which consistently addresses both bank and nonbank financial firms. Second, implementation of Dodd‐Frank Act provisions is subject to long‐established US law mandating that there be sufficient opportunity for public input into the rulemaking process, whereas the G20/FSB process has been less systematic and transparent on public consultation and feedback. Practical implications - These observations may be relevant to the current debate over the speed and scope of Dodd‐Frank Act implementation measures, and to the discussion about the future international competitiveness of US banks and nonbank financial firms. Originality/value - This study is the first to present a detailed, comprehensive comparison of financial system reform initiatives and provisions in the Dodd‐Frank Act and the G20 agenda.

Suggested Citation

  • Daniel E. Nolle, 2012. "Global financial system reform: the Dodd‐Frank Act and the G20 agenda," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 4(2), pages 160-197, May.
    • Handle: RePEc:eme:jfeppp:v:4:y:2012:i:2:p:160-197
    DOI: 10.1108/17576381211229005
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    References listed on IDEAS

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    1. Ceyla Pazarbasioglu & Luc Laeven & Oana M Croitoru & Stijn Claessens & Fabian Valencia & Marc C Dobler & Katharine Seal, 2011. "Crisis Management and Resolution; Early Lessons from the Financial Crisis," IMF Staff Discussion Notes 11/05, International Monetary Fund.
    2. Ceyla Pazarbasioglu & Mr. Luc Laeven & Mrs. Oana M Croitoru & Mr. Stijn Claessens & Mr. Fabian Valencia & Mr. Marc C Dobler & Katharine Seal, 2011. "Crisis Management and Resolution: Early Lessons from the Financial Crisis," IMF Staff Discussion Notes 2011/005, International Monetary Fund.
    3. Stephane Rottier & Nicolas Véron, 2010. "An assessment of the G20's initial action items," Policy Contributions 784, Bruegel.
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