Connecting National Safety Nets: The Dialectics of the Basel II Contracting Process

Edward Kane

Atlantic Economic Journal, 2007, vol. 35, issue 4, 399-409

Abstract: Basel II consists of supervisory guidelines negotiated by representatives of central banks and national regulatory commissions that were members of the Basel committee on Banking Supervision (BCBS). The BCBS is itself a regulatory response to globalization, which is connecting national safety nets in market-driven ways. A country’s financial safety net is a social contract established by short-lived agents for principals in long-lived economic sectors. Restraints placed on the authority of the BCBS members to contract for their principals by domestic politics explains: why Basel II authorizes individual countries to implement the agreement in markedly different ways; why US implementation of Basel II ran into so much doubt, controversy, and delay; and how the implementation debate set small and large banks and the Federal Reserve and other federal regulators against one another. Copyright International Atlantic Economic Society 2007

Keywords: Basel II; Bank regulation; Financial safety net; G21; G28; G38 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/s11293-007-9095-5

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