Global coordination of regulation and supervision in the financial sector

Abstract

The latest financial crisis revealed not only deficiencies of the market
economy systems but also of the regulatory and supervisory solutions that
should at least lessen real consequences of wrong financial decisions. Normative
arbitration that in the era of globalisation allows for the relocation of
a company registered office to a country with fewer legal requirements led to
the erosion of prudential standards. In order to counteract these tendencies,
the biggest global economies established a coordination network closely linking
the political aspect with the economic and financial one. The G-20 group
and the Financial Stability Board (FSB) are the most important elements of
that coordination process. The article aims to analyse those groups’ mutual
relations. Remembering of course that original delegation for the G-20 group
is from sovereign states, the author believes that they can be interpreted
in terms of a scheme: principal – agent, which is known in economic and
political sciences. On the other hand, the analysis of FSB activeness, with
all the deficiencies resulting from incomplete subordination to the regime
of international public law, indicates that it plays the role of an institution
of macroprudential supervision over the global financial market. Thus, the
decrease in the intensity of the systemic risk, which may still become a reality,
depends on its efficient functioning. The designed mechanisms of political
pressure and efficient secondary delegation to specialised supervisory groups
sensu stricto make the Financial Stability Board an efficient forum implementing
the tasks of macroprudential supervision.