Journal Article

Enforcing International Financial Regulatory Reforms

Bin Gu and Tong Liu

in Journal of International Economic Law

Volume 17, issue 1, pages 139-176
Published in print March 2014 | ISSN: 1369-3034
Published online February 2014 | e-ISSN: 1464-3758 | DOI: https://dx.doi.org/10.1093/jiel/jgu002
Enforcing International Financial Regulatory Reforms

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International finance law keeps the tradition of ‘soft law’ standards even after the 2008 financial crisis. This status quo derives from concerns over sovereignty and regulatory uncertainty. Although soft law has merits in pragmatic rule making and flexible rule implementation, soft law is not an efficient design for international financial regulation. The soft-law tradition led to difficulties in implementing G20-led international financial regulatory reforms against the 2008 financial crisis. Inconsistent implementation and potential regulatory arbitrage across borders have swamped all sectors of international financial regulatory reforms. The implementation problem tends to induce states to race to the bottom, making international financial regulatory reforms in vain, and even laying the ground for the next financial crisis. This article calls for keeping the right momentum of hardening international finance law along possible dimensions of obligation, stringency, delegation, and enforcement. This article proposes that a stronger institution of the Financial Stability Board will help facilitate the reforms, and a credible dispute settlement mechanism is a necessary design for enforcement.

Journal Article.  18873 words. 

Subjects: Financial Law ; Public International Law ; Economics

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