Five years into the global financial crisis we still lack robust institutions and regulations for governing finance at the national, regional and global levels.
Slow progress has been made to reforming the international financial architecture, despite having been at the top of the global agenda since 2008. This policy memo, co-authored by Geoffrey Gertz and Emily Jones at the University of Oxford's Global Economic Governance Programme, identifies three unresolved challenges in global financial governance:
Challenge 1: Developing countries are profoundly affected by new rules governing international finance, yet remain severely underrepresented at the negotiating table. Little attention has been paid to how new global financial regulations will affect developing countries.
Challenge 2: Banking reforms fall short of the dramatic changes many expected back in 2008/2009, and many large banks successfully lobby to water-down new regulations.
Challenge 3: Large parts of the financial system remain unregulated. The use of capital controls is constrained by international trade and investment agreements.
This memo sets out six principles to guide the creation of a safer, more stable global financial architecture.
- Inclusion: for small and developing countries.
- Not one-size-fits-all: flexible standards that allow for considerable national discretion.
- Simple rules: banking rules must be simpler and clearer so that they can be enforced more consistently.
- Transparency: leaders need to open up processes of global financial regulation.
- Scope: the scope of regulation needs constantly to be reassessed.
- Coherence: leaders must consider how to ensure consistency and agreement across global trade, investment and finance regimes.
Geoffrey Gertz is Research Officer, Global Economic Governance Programme, University of Oxford. Emily Jones is Deputy Director, Global Economic Governance Programme, University of Oxford