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

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 e...

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Bibliographic Details
Published in:Journal of banking regulation 2016-03, Vol.17 (1-2), p.34-45
Main Author: Germain, Randall
Format: Article
Language:English
Subjects:
Banking
Banking industry
Capital markets
Cross border transactions
Currency
Economic crisis
Economics and Finance
Finance
Financial Law/Fiscal Law
Globalization
International banking
International finance
International relations
Legislation
Original Article
Power
Regulation of financial institutions
Securities markets
Studies
Transnationalism
Wall Street Reform & Consumer Protection Act 2010-US
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Summary: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.
ISSN:1745-6452
1750-2071
DOI:10.1057/jbr.2015.14