Governance of International Banking: The Financial Trilemma (Chapter 1)

Governance of International Banking: The Financial Trilemma, Oxford University Press, 2013

19 Pages Posted: 3 Apr 2013 Last revised: 9 Apr 2013

See all articles by Dirk Schoenmaker

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Date Written: April 1, 2013

Abstract

The Global Financial Crisis has shown that the international financial system is vulnerable to breakdown. The financial trilemma demonstrates that financial stability, international banking and national financial supervision cannot be combined. National supervisors force international banks to keep local liquidity pools and capital buffers, which cannot be transferred. This national approach is a very costly solution to the trilemma. The book "Governance of International Banking" explores an alternative solution to keep international banking alive. The central element is an international coordinated approach to supervision and resolution of international banks. International financial institutions, like the Bank for International Settlements and the International Monetary Fund, should take on a supervisory role of global systemic banks, broadening their mission for monetary stability to one that includes monetary and financial stability. At the European level, the European Central Bank is currently assuming the financial stability mandate for the European banking system.

Keywords: Global Financial Crisis, Global Governance, International Finance, Financial Trilemma, Global Financial System, International Financial Regulation, G-SIBs, G-SIFIs, IMF, BIS, ECB, FSB, Banks, Systemic Risk

JEL Classification: E44, F33, F34, F55, F59, G1, G15, G2, N20, N40

Suggested Citation

Schoenmaker, Dirk, Governance of International Banking: The Financial Trilemma (Chapter 1) (April 1, 2013). Governance of International Banking: The Financial Trilemma, Oxford University Press, 2013, Available at SSRN: https://ssrn.com/abstract=2243105

Dirk Schoenmaker (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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