Global Governance of Financial Systems: The International Regulation of Systemic Risk
This book finds serious deficiencies with the by now extensive system of committees, organizations, rules, and guidelines that have emerged to govern and manage the international financial system. Concretely, it suggests that the existing framework, based on the supervision of individual financial institutions (especially banks), fails to take adequate account of the negative macroeconomic consequences that may flow from the financial failures of particular institutions. Even worse, emerging rules (such as the Basel II guidelines for minimum bank capital) may actually increase systemic fragility by making financial institutions more homogeneous in their behavior, leading to abrupt disruptions (financial crises) following periods of apparent but fragile stability. In making its central argument, the book offers informative coverage of the International Monetary Fund, the Basel committees on banking, the Asian financial crises, bankruptcy, the legal aspects of the system for settlement of payments, and many other relevant topics.
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