2017 Reports

A New Governance Framework for Global Financial Regulation?

Kono, Masamichi

Nearly ten years since the outbreak of the global financial crisis, it is high time to take stock of the progress made in terms of global financial regulatory reform and to assess the overall, cumulative effects of reform. This article, after providing a brief overview of the history of post-crisis reform, presents a set of principles to be followed in regulatory reform for the financial sector, going forward. It puts forward some ideas for improving the organizational structure and governance of the global regulatory reform process, stressing the importance of global standards as developed by standard-setting bodies such as the Basel Committee, IOSCO and IAIS, with the G20/FSB leading and coordinating the process. It goes on to suggest providing a stronger legal foundation for the entire process by making use of a treaty-based regulatory framework, while retaining sufficient flexibility at the national level. It proposes to achieve this goal by combining a principles-based legal framework with a set of technical standards that supplement and augment the principles, and provides some practical ideas to facilitate international agreement in the current political environment.