How Effective are the Transnational Regulatory Networks? A Perspective of International Financial Regulation
How Effective are the Transnational Regulatory Networks?
A Perspective of International Financial Regulation
Xun Li
 
ABSTRACT: Systemic repercussions across borders due to the transnational activities of financial conglomerates can pose common threats to jurisdictions worldwide as the last global financial crisis unfolded. In response, transnational regulatory networks (TRNs) in international financial regulation, such as the Basel Committee and IOSCO, have championed a sequence of initiatives on them at the international level. As sectoral TRNs, what roles they are playing for global financial stability remains to be studied in the context of financial globalisation. This article aims to examine these financial TRNs from the perspective of analysing their components in operation. After illustrating the popping-up of TRNs and its reasons, this article presents an overview of the existing literature on TRN theory, especially highlighting the most prominent arguments of relevant scholars. Building on this, it sets out the features and constituent elements of TRNs, especially the soft law mechanism. Then, by exploring these components, this article focuses on the effectiveness of TRNs in international financial regulation, examining their strengths and weaknesses in helping member regulators address cross-border systemic risk. This article finds that these TRNs play significant roles in converging financial regulatory norms and facilitating regulatory cooperation worldwide, despite their deficiencies in enforcement, sanction, structure and accountability.

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