International Financial Standards: An Argument for Discernment
CIGI Policy Brief No. 135 — August 2018
12 Pages Posted: 29 Oct 2018
Date Written: August 30, 2018
Multiple shocks have led regulators and policy makers to put increasing faith in the diagnostic and prophylactic powers of international financial standards, but the nature, appropriateness and normative force of such standards varies. As a standard setter, the International Organization of Securities Commissions (IOSCO) has pursued global consensus, harmonization and international best practices for many years. International standards, however, are often created under suboptimal conditions by actors with a broad range of motivations, assumptions and biases. Frictions between state-level regulation and international standards can undermine their effectiveness. This policy brief examines the process of standard setting and two very different sets of standards and their standard setters to illustrate some of the anomalies associated with them. The process has become more complex, more compromised and more politicized, leading in some cases to “pseudo-international” standards or a riot of diverse viewpoints, of limited practical use. The danger lies in major economies walking away from international standards which no longer demonstrate pertinence or credibility.
Greater discernment should be exercised by state-level policy makers, international financial institutions and the international organizations themselves in proposing, deploying and implementing international standards.
Keywords: IOSCO, International Financial Standards, IMF, World Bank, Credit Rating Agencies, ESMA, CESR, OECD, G20/OECD Principles of Corporate Governance
JEL Classification: G02, G15, G18, G24, G30, K22, K33, F01, F02, F30, F36, F38, F42, F53, F65
Suggested Citation: Suggested Citation