Regulating International Banking And Finance

In the past decade there have been many changes taking place in the international banking and finance system which have threatened its stability. Because of this the Group of Ten (G-10) has looked at ways of strengthening the way banks are supervised and regulated.

G-10 is the body which provides the policies with regards to all aspects of international banking and is made up of the ten industrial countries which have the biggest economies. In this group you will find the USA and UK. The policies they bring into force help to strengthen how the international banking system is regulated and supervised because of the changes that were taking place during the 1980’s and 1990’s.

Through the use of these new policies and arrangements it has meant that they have been able to reduce the risks associated with this particular finance system and therefore help to prevent any potential problems from occurring.

However in order that they can help to ensure that the international finance system remains stable and efficient in the future, they now need to start to include other emerging market countries into the equation. Certainly in recent years countries in Asia have become extremely important participants in the global financial markets of today. So the exposure for investors and banks with these emerging market countries has been increasing quite dramatically as well. Today you will find that both Singapore and Hong Kong have now become the fourth and fifth (respectively) largest trading centers for foreign exchange matters in the world today.

Also because of the emergence of these countries into the global market, the major industrial countries have now recognized there are inadequate strategies in place that focus on the international financial sector. Because of the growth in international banking and finance this has meant that many financial institutes, if they wish to, can move their businesses to countries which are less rigid when it comes to supervising and regulating what goes on in the financial sector in their country. So it has become extremely important in the last few years that the assigning of responsibilities and setting certain minimum standards that banks have to adhere to have become very critical. It is through the agreements set up by the G-10 countries that such standards and responsibilities have now been produced and which are governed over by the Basle Committee on Banking Supervision which was set up and established in 1974.