Architects of stability? International cooperation among financial supervisors

Ethan Kapstein
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Ethan Kapstein: INSEAD - Economics, Political Sciences

No 199, BIS Working Papers from Bank for International Settlements

Abstract: The objective of this paper is to provide a balanced assessment of international cooperation among financial regulators, with a focus on banking supervision. While recognizing the undeniable – and even unexpected – achievements of these regulators in building a cooperative framework for financial supervision, we also suggest that this remains a work in progress, given the contemporary financial risk environment. Briefly, we argue that this environment – to the extent we understand it, for it remains opaque in important respects – has an almost paradoxical quality, in that risk has become both more consolidated and more atomized at the same time. On the one hand, large and complex financial institutions (LCFIs) which may be "too big to fail", increasingly dominate the banking landscape; on the other, these same institutions have shifted at least a portion of their risks onto other firms and households, whose absorptive capacity has yet to be severely tested. It is the effectiveness of the international supervisory architecture in the face of this risk environment that we consider, and we then provide some suggestions for future policy reforms.

Keywords: international cooperation; central banks; financial stability; regulation; banking supervision (search for similar items in EconPapers)
JEL-codes: E5 F3 G28 G3 N20 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2006-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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