At the brink of regulatory convergence

Abstract

Nearly eight years ago, a study “Global Institutions, National Supervision and Systemic Risk” was released by the Group of Thirty (G‐30), a private, nonprofit international body that seeks to deepen understanding of international economic and financial issues. The report observed that in a world of global financial conglomerates, supervisory structures that are divided by industry and nationality may create “gaps” that could place the financial system at greater risk of instability. The 1997 report recommended that global institutions‐working with the jurisdictions in which they operate‐develop principles of risk management to which they will adhere, as well as a mechanism for making that adherence transparent to the markets. It further proposed that financial regulators focus more attention on the systemic risk presented by markets and clearing mechanisms that link financial institutions and systems around the world.