Kasinomics

Project: Mapping the Financial Governance

When academics, analysts and scholars analyze the causes and remedies for the current credit crisis, most of them analyze macro-economic trends such as exchange rate movements, or micro-economic changes such as Basel II.

How the global financial architecture evolved and how that influences the probability of crisis is very rarely discussed. In the analysis, the network structures of the global financial architecture is often forgotten.

The financial architecture is the system of public and private bodies which try to influence the regulation and standards required for financial markets to function. These are the the main types of actors in the financial architecture:

• Governments
  1. National governments, in particular finace ministers
  2. Informal meetings of government officials, such as the G7
  3. Supra-national government organisations, such as the EC
  4. International organisations representing the interests of governments, such as the IFM, World Bank, OECD.
• Central banks
  1. National Central Banks
  2. Informal Meeting of Central Bank Governors, such as the G10
  3. Supra-National Central Banks, like the ECB
  4. International Organisations of Central Banks, such as the BIS
• Regulators
  1. National Regulators responsible for
     • Banks and other financial intermediaries
     • Securities Firms and other type of trade of financial derivatives
     • Insurers
  2. Supra-National Meetings of Regulators
     1. with specific regulatory tasks, such as CEBS, CESR or CEIOPS
     2. with over-arching regulatory tasks
  3. International Meetings of Regulators
     1. with specific regulatory tasks, such as BCBS or IOSCO
     2. with over-arching regulatory tasks
• Private Bodies
  1. National Lobbying Group of Financial Institutions
  2. Surpa-National Lobbying Group of Financial Institutions
  3. International Lobbying Group of Financial Institutions
• Academic Consultancies and Think Tanks
• NGOs

The heuristics still has some weakness, but it helps to get a first picture of the financial architecture.

It is difficult to get a meaningful categorization of the private bodies because scope and membership of these private bodies are overlapping. Some of these organizations have identical aims but conflicting interests because they represent financial actors from different regional constituencies without however saying this in their statutes.

The categorization concerning NGOs and Academic Institutions lacks details because they are not the main actors in standard-setting, which is the second part of the financial architecture. So in addition to the actors, a list of standards would be needed which then can be attributed to particular organisations.

There are quite a few hybrid bodies and it is difficult to put them into the system above, such as the FSF. Also the disction between public and private organisations are not as sharps, because many public bodies have advisory councils consisting of representatives from banks or other large financial institutions.

The distinction between regulation, standards and lobbying is also quite blurred. In financial markets, self-regulation and technical standards agreed upon without government intervention play an important role. Regulation sometimes reflects either the attempts of the industry to self-regulate (for instance in Codes of Conduct) or serves the interests of certain part of the industry to keep their competitors out of certain market segments.

The Mapping-Project undertaken here aims to get a better understanding on how standards are produced, how the financial actors communicate and co-operate and how the financial architecture is being build.

Key Questions to be asked will be:

• Decision-Making Process
• Established by law or statute

Topics of this post: basel II, bcbs, bis, cebs, ceiops, central banks, cesr, code of conduct, finance ministers, financial architecture, financial institutions, financial markets, financial regulation, g10, g7, imf, iosco, Memo, oecd, regulation, world bank

See also

• Intergovernmentalism in Financial Regulation
• Membership of Key Economies in International Organisations
• G33 – Group of Thirty-Three
• G22 – Group of Twenty-Two
• Summary of the recommendations of the Meltzer-Report
• G10 – Group of Ten
• Overview of 2008 FSF Report on Financial Stability
• G8 Action Plan on Local Currency Bond Markets – Overview
• G20 – Group of Twenty
• JF – Joint Forum

20. April 2008 by kasi
Categories: Memo | Tags: basel II, bcbs, bis, cebs, ceiops, central banks, cesr, code of conduct, finance ministers, financial architecture, financial institutions, financial markets, financial regulation, g10, g7, imf, iosco, oecd, regulation, world bank | 8 comments