The logical and compelling case put forth by Mr. Kahn is both correct and noble. Yet, the challenges are not singularly contained within the accords, regulators, financial governors, or even academics with vast knowledge of current and evolving financial system interoperability. The end actions and subsequent results are legislated at the hands of politicians. As history tells us, this latter lot of individuals is seldom rationale and always opportunistic.
Moreover, regulation cannot be created in a vacuum of based upon a model of what is desired. Unemployment, trading deficits, national deficits, education of populace, exchange rates, nationalistic policies, and many other factors all are variables in the debate. As Mr. Kahn states, the complexity of herding each domestic leadership group (often many within each country), creates permutations and conflicts of interest, which I’m sorry to say, will unlikely ever be overcome.
It is likely that we will get some general agreements that provide statement of direction or a loosely coupled, non-binding framework. However, for domestic politicians to state to their electorates that they are ceding financial regulatory governance control to an international body seems counter to their goals of being re-elected.
More than likely, it will be up to each nation to craft rules and regulations that meet the “spirit” of the regulation and its overarching governance principles. For many of us, that would be a welcome change from endless debate or worse, doing nothing.
Tags: Financial Times