Should Financial Regulators Engage in International Policy Coordination?

This policy brief examines issues associated with the design and implementation of regulatory policymaking in interconnected financial markets. The policy brief explains why international interdependence among nations’ financial markets and regulations can provide an incentive for national financial supervisory agencies to contemplate coordinating their regulatory policies. It also assesses, in the context of a review of recent research on the part of banking and financial economists, ways in which interdependence among financial systems can create a potential for international regulatory policy conflicts. In addition, the policy brief evaluates whether such conflicts are insurmountable or might be somewhat mitigated at least somewhat via bargains among regulatory authorities.