Locating authority: Resolution regimes, SIFIs and the enduring significance of financial great powers

Abstract

Financial governance has for the past 40 years had a growing global component, most often identified as the ‘international (or global) financial architecture’. The financial crisis of 2008–2009 revealed a significant problem in this architecture with respect to its division of labour. This article explores this problem in relation to one aspect of financial governance: resolution regimes. These are seen as an important tool to contain the disruptive effects of the failure of a systemically important financial institution, or SIFI. By examining the Dodd–Frank legislation’s Title I and II provisions for the resolution of SIFIs and the 2012 joint paper between the Federal Deposit Insurance Corporation and the Bank of England on how to wind up SIFIs with extensive cross-border connections, I consider how these developments are affecting the globalization of financial governance. Efforts to strengthen resolution mechanisms unambiguously demonstrate the centrality of financial great powers when it comes to the question of where governance authority actually resides in the global financial system. This conclusion suggests a broader scepticism about the supposed ‘global’ dimension of the world’s financial architecture, and points to continuing tension between the United States and EU over financial regulation.