Abstract
AbstractInternational non‐majoritarian institutions (NMIs) in finance have proliferated over the last decades. The Basel Committee on Banking Supervision (BCBS) is the main international NMI in finance and the European Union (EU) is one of its core jurisdictions. Despite the far‐reaching effects of international banking standards in the EU, especially the Basel accords, there has been limited politicization of delegation to the BCBS and no attempt to reverse it. Why? By taking a “soft” principal‐agent approach, this paper points out two explanatory factors: the composite nature of both the principal and the agent. It also identifies a pattern that can be generalized to other international NMIs in finance. Thus, following the initial delegation of international standard‐setting to the BCBS, this international NMI considerably increased its activities, going beyond what certain elected officials wanted; the response from elected officials was limited to the use of relatively weak ex‐ante and ex‐post controls, including delayed compliance.
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