Andrew Walter: (Minutes+PPT) Fragmentation and Resilience in Global Economic Governance: Emerging Countries and Financial Regulatory Standard-Setting

The minutes are based on the speech by Andrew Walter from the Workshop on Emerging Countries in Global Financial Governance held on February 26, 2019. Andrew Walter, Professor of International Relations at University of Melbourne Evidence of Basel’s Relative Resilience — Little conflict among major countries in recent years over financial regulatory policy — Remains relatively productive since 2016 in spite of the growing volatility — Still exhibits a low degree of international institutional competition even after the dramatic regulatory failures Explanations of Fragmentation and Centralization in Global Economic Governance — Strong market incentives for follower states to adopt the financial regulatory standards of dominant states — Strong incentives for leading states to foster a unitary global institution for propagating their standards as multilateral standards — Strong network benefits for all actors converging on a single set of financial regulatory standards Benefits of Basel Participation for EMCs — Status benefits due to formal equality & exclusivity of Basel — Domestic political leverage for reformers — Learning from more developed, higher capacity peers — Political benefits to leaders: some insurance against destabilizing crises — Limited political costs: formal equality, weak secretariats, national discretion permitted, low domestic political salience — Potential for‘internal graduation’: EMCs may gradually build market importance and regulatory capacity thus influence over global standard-setting Emerging Country Government Preferences and Behaviour

• China

— Emphasizing the status and learning benefits as well as the opportunity it presents to enhance its influence in global financial governance. — Focusing on promoting economic development and regulatory reforms — Be consistent that China can obtain multiple benefits from participation in Basel

• India

— Higher capital ratios as envisaged in Basel III would hurt growth in EMEs — Favour greater reliance on national solutions rather than the establishment of alternative institutions — Such local adaption strategies are less easily available to EMCs How Can Resilience be Sustained and Enhanced — Deepen domestic financial markets — Integrate risk assessment between the IMF, FSB and BIS — Integrate contrarian views, including those from the non-financial sector   For further details All developments regarding IMI can be followed at http://imi.org.cn/ or http://imi.org.cn/en/. For further information, contact via imi@ruc.edu.cn.  

DOWNLOAD