International Capital Rules: Harmonization, Conflict or Competition

There is a conflict between the philosophies of United States (US) style capital regulation and that of the European Union (EU). While the conflict looks like it will not evolve into a real trade issue, there is a potential for misunderstanding of the pros and cons of the two systems. This paper will compare and contrast capital regulation in the EU and US focusing on the areas where competition, conflict and harmony may exist. The idea of capital regulation is to minimize the costs of insolvencies. This paper identifies some of the costs involved in capital regulation and offers an initial paradigm on how to compare the systems.