International agreements in the area of banking and finance: accomplishments and outstanding issues

The deregulation of domestic financial markets, in association with technological progress, has led to an explosion of cross-border financial transactions and the cross-border establishment of premises. In turn, this has led to a need for international agreements on how the business of international finance and banking should be conducted. Private and public sector bodies have generally both been actively involved, but leadership has varied depending on the purpose of the agreement in question. Agreements to facilitate the conduct of cross-border financial transactions have in large measure been driven by private sector agents. Conversely, agreements to deliberately encourage the expansion of cross-border competition and to promote and maintain financial stability have been led by the public sector given the possibility of significant economic externalities. Many agreements to promote financial stability have been reached by committees operating at the Bank for International Settlements under the aegis of the Governors of the Group of Ten. Such agreements have moral authority, being based on discussions among representatives of sovereign states, but are nevertheless enforceable only by domestic legislation or regulation.