The Independence of Domestic Financial Regulators: An Underestimated Structural Issue in International Financial Governance
Goettingen Journal of International Law, Vol. 2, No. 1, pp. 93-110, 2010
18 Pages Posted: 19 Apr 2010 Last revised: 26 Apr 2010
Date Written: April 18, 2010
Among the myriad of institutions involved in the reshaping of the international financial system, several standard-setting bodies (the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the International Association of Insurance Supervisors) present the distinctive feature of being comprised of national independent regulatory authorities. The international activity of these independent authorities has complicated and blurred several aspects of the standard-setting process of the aforementioned international institutions. Despite being the product of a soft law process, international financial standards are in practice influential international rules. Given this de facto predominance, these standards result in a fait accompli for domestic or regional authorities which have no choice but to implement them, therefore bypassing the traditional democratic dimension of the law-making process. Although the standard-setting activities have progressively included consultation procedures, they have not completely corrected this flaw. Another problem stems from the presence of several domestic regulatory authorities representing the same state and rendering the decision-making process more complex at the international level. For these reasons, this article aims to demonstrate that the establishment of an international financial organization may correct these institutional gaps without necessarily call into question the soft law nature of the standard-setting process.
Keywords: Basel Committee, IOSCO, IAIS, Independent financial regulatory authorities, Central banks, Comitology, International financial regulation, International financial standards, Separation of powers, Soft law
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