Monetary and Economic Studies Vol.31 / November 2013

Is New Governance the Ideal Architecture for Global Financial Regulation?

Annelise Riles

A central challenge for international financial regulatory systems today is how to manage the impact of global systemically important financial institutions (G-SIFIs) on the global economy, given the interconnected and pluralistic nature of regulatory regimes. This paper focuses on the Financial Stability Board (FSB) and proposes a new research agenda for the FSB’s emerging regulatory forms. In particular, it examines the regulatory architecture of the New Governance (NG), a variety of approaches that are supposed to be more reflexive, collaborative, and experimental than traditional forms of governance. A preliminary conclusion is that NG tools may be effective in resolving some kinds of problems in a pluralistic regulatory order, but they are unlikely to be suitable for all problems. As such, this article proposes that analyses of the precise conditions in which NG mechanisms may or may not be effective are necessary. It concludes with some recommendations for improving the NG model.

Keywords: International financial regulation; Global systemically important financial institutions; Financial Stability Board; Regulatory reform; New Governance; Regulatory pluralism

Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.

Copyright © 2013 Bank of Japan All Rights Reserved.

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