International Law-Making by Hybrid Bodies: The Case of Financial Regulation
Forthcoming as Chapter 14 in Handbook on the Theory and Practice of International Lawmaking, C. Brolmann and Y Radi (eds), Edward Elgar Publishing.
37 Pages Posted: 18 Jul 2015
Date Written: July 16, 2015
The recent financial crisis, which roiled the globe beginning in September 2008, nearly decimated global financial markets and in fact devastated the real economy of the United States and Europe, with concomitant global harm. The crisis exposed fundamental weaknesses — both procedural and substantive — in the international financial regulatory architecture. The Bretton Woods institutions (the International Monetary Fund (IMF), World Bank, and World Trade Organization (WTO)) were never really equipped to deal with the growing complexity, breadth, and size of the global financial system, and instead left rule-making and supervision largely to the domestic arena. The cross-border rules that were developed by national regulators and the international standard-setting bodies that took root in this global institutional lacuna in the 1980s proved woefully ineffective. Despite strategies to increase the accountability and legitimacy of these hybrid standard-setting bodies,1 the rules failed substantively, and overwhelmingly. Global finance, and a “soft-law” architecture left unchecked by a decades-long regulatory race to the bottom, proved weak in the face of global financial institutions and crushed the real economy.
JEL Classification: K33
Suggested Citation: Suggested Citation