The G20 and the Challenge of International Financial Re-regulation Notes de l'Ifri, January 2011
The crisis, it is now widely accepted, means that markets failed. Meeting for the first time in Washington in November 2008, the G20 embarked in a ride of re-regulation. Months of negotiations later, it dramatically appears different to agree on principles and broad objectives, and to write and enforce rules and commitments.
Toronto, the fourth G20 summit, delivered few tangible progresses. The paper first discusses the fundamental reasons why international convergence of financial regulations is difficult in a multipolar and heterogeneous world. Nevertheless, the prevention of systemic risk and the reinforcement of bank regulation and supervision have made significant steps forward and will testify in Seoul of successful actions following the G2O decisions. This exemplifies what we call “workable convergence”. For the future, the agenda will raise more treacherous questions like the treatment of SIFIs and derivatives. Views could be even more confrontational regarding the convergence of accounting standards and the activity of investment banking. The conclusion discusses the chance to make the financial system safer and calls for the Seoul summit not only capitalizing on existing results but giving a fresh momentum to improve the convergence of international financial standards.
(September 24th, 2010)