The Institute of International Finance today released a staff paper highlighting the beneficial role international standard setting bodies play in the global economy and suggesting consideration of reforms of these institutions.
"Finance is global and we need a global regulatory structure to ensure the efficient flow of capital and to protect against fragmentation, which could ultimately make the system weaker," said Tim Adams, President and CEO at' the IIF. "Institutions like the Financial Stability Board and the Basel Committee have done tremendous work to make our financial system safer, sounder and more robust."
"A genuine risk of undermining the international regulatory process is the unraveling of international consistency," said Brad Carr, Director of Banking Prudential Policy at the IIF, and co-author of the report. "This could bring considerable costs to economies around the world that benefit from international connectivity."
The IIF argued that international coordination and cooperation across multiple disciplines has substantially increased the stability of the global economy. International cooperation and consistency promotes economic growth through supporting the efficient flow of capital; promoting competition; creating efficiencies and reducing costs; and supporting financial stability.
"Building on the benefits of this international process requires assessments and' consultations. Increasing transparent and substantive engagement with all stakeholders at the early stages of discussion and debate is one improvement that would help make the process more meaningful," said Matthew Ekberg, Senior Policy Advisor at the IIF and co-author.
Additional recommendations included more common adoption of impact assessment and cost-benefit analysis, ex-post assessment on a periodic basis and greater proportionality in the application of international standards.
The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. IIF members include commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks.' For more information visit www.iif.com