LONDON – A little more than three years ago, just as the financial crisis was getting into full swing, I published a guide to the international system of financial regulation, Global Financial Regulation: The Essential Guide. It described an elaborate spider’s web of committees, councils, and agencies with overlapping responsibilities, unrepresentative memberships, and inadequate enforcement powers – a system built up incrementally over decades, with no guiding architectural hand or central authority to promote coherent global regulatory standards.
After all that has happened in the intervening years to demonstrate the dangers inherent in these flaws, and a plethora of summits and conferences, a 2008 guide to financial regulation ought now to be hopelessly out of date. Unfortunately, it is not.
True, some things have changed for the better. At the apex of the pyramid, the G-7 was obliged to give way to the broader G-20, bringing countries like China and India into the decision-making nexus as full partners. G-20 summits are more cumbersome as a result, but that simply reflects the reality of the ongoing shift in economic power from West to East.
There is no point in pretending that this shift is not happening, or that standards set in New York and London will be slavishly followed in Mumbai and Beijing if China and India are not involved in the process. So the increased importance of the G-20 should be welcomed.