Quo Vadis Globalisation? Limits of Global Financial Regulation

Abstract

Since the 1990’s the global capital movements in the world economy took new direction: the previous scruples of the activity of transnational companies have disappeared. The global phenomena of market-oriented liberal economic policies swept aside the formal objection and uncertainty against international working capital flows. The general conviction was that the markets are more effective regulators than governments, parallel with the confidence that transnational companies are the most successful forms of market efficiency. Then came the crisis of 2008, and since the Lehman Brothers has felt, the governments, specialists and scholars are searching for a better equilibrium of regulation of the financial markets. I am deeply concerned that we are just at the beginning of the road towards a better or at least safer global financial market. The study is analyzing three levels of regulation of financial markets: (1) global, (2) regional and (3) national efforts made to avoid a next crisis. On the global scale, the IMF-FSB cooperation is examined, and among this the Early Warning Exercise. On the regional level the study compares the USA governmental regulation based on the Dodd Frank Act and the EU’s legal instruments on preventing the upcoming crises, basically the European System of Financial Supervision. How far the globalized market regulation may go? What indicators will show the success (or fail) of these new institutions and procedures? Is there any space for national authorities to choose a different way but the common? The study will examine the upper questions, and come to an answer that after circa 30 years of global liberalization on the financial markets it can’t be a surprise that the impacts of the crisis cannot be eliminated during some years of strictness. The study summarizes that while the “impossible trinity” is working in the financial markets, without a global (or at least European) regulatory framework the common goals are unreachable.At the end, one question still remains opened: if the supervisiory authorities designed to save us from the next crisis remain legally not liable, what are the efforts for?