The Global Financial Crisis and the Financial Stability Board: Hardening the Soft Law of International Financial Regulation?

Abstract

This article considers the Finanical Stability Board and the extent to which this extension of the current soft regime can be a substitute for a regime with greater enforcement powers. The paper concludes that greater institutional backing for the FSB is achievable without moving to a fully treaty-based, hard law solution. However, while these arrangements are likely to enhance the ongoing supervision of crossborder financial groups and will lead to generally higher supervisory standards throughout the world, it is unlikely that they will be able to deliver improvements to the second major issue on which enhanced coordination is being sought, namely improved crisis management arrangements and agreements on burden sharing. In the latter case, only a hard law solution, perhaps imposing binding arbitration on the relevant parties, is likely to be effective, but the political will to develop such an approach was not evident at the 2009 G20 London Summit.