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Architects of stability? International cooperation among financial supervisors

Author

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  • Ethan B Kapstein

    (INSEAD - Economics, Political Sciences)

Abstract

The objective of this paper is to provide a balanced assessment of international cooperation among financial regulators, with a focus on banking supervision. While recognizing the undeniable – and even unexpected – achievements of these regulators in building a cooperative framework for financial supervision, we also suggest that this remains a work in progress, given the contemporary financial risk environment. Briefly, we argue that this environment – to the extent we understand it, for it remains opaque in important respects – has an almost paradoxical quality, in that risk has become both more consolidated and more atomized at the same time. On the one hand, large and complex financial institutions (LCFIs) which may be "too big to fail", increasingly dominate the banking landscape; on the other, these same institutions have shifted at least a portion of their risks onto other firms and households, whose absorptive capacity has yet to be severely tested. It is the effectiveness of the international supervisory architecture in the face of this risk environment that we consider, and we then provide some suggestions for future policy reforms.

Suggested Citation

  • Ethan B Kapstein, 2006. "Architects of stability? International cooperation among financial supervisors," BIS Working Papers 199, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:199
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    References listed on IDEAS

    as
    1. Cornelia Holthausen & Thomas Rønde, 2003. "Cooperation in International Banking Supervision," CIE Discussion Papers 2004-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    2. Robert Litan & William Isaac & William Taylor, 1994. "Financial Regulation," NBER Chapters,in: American Economic Policy in the 1980s, pages 519-572 National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Anastasia Nesvetailova, 2012. "Liquidity Illusions in the Global Financial Architecture," Chapters,in: Research Handbook on International Financial Regulation, chapter 15 Edward Elgar Publishing.

    More about this item

    Keywords

    international cooperation; central banks; financial stability; regulation; banking supervision;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G3 - Financial Economics - - Corporate Finance and Governance
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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