African Countries Need Greater Representation in Global Financial Standard Setting

Dr Emily Jones, GEG Director, presented new research findings on global banking standards to a high level forum of Central Bank Governors from across Africa, hosted by the Centre for the Study of African Economies at All Souls College in Oxford.

Together with GEG colleagues, Dr Jones is analyzing the implementation of Basel Banking Standards across the world, as part of the project on Navigating Global Banking Standards. While Basel standards have spread across more than 100 countries, there is substantial variation in the extent to which they are being adopted. Dr Jones argued that this is attributable largely to the complexity of the standard, and the challenges that regulators in developing countries face in implementing the standard in their jurisdiction.

Although in theory Basel standards are voluntary and African regulators can choose which elements to adopt, in practice Dr Jones and her team have found evidence that regulators face strong market incentives to adopt the standards, in order to signal to financial markets and investors that their banks are well regulated. For this reason, she argued that it is important that African countries are better represented in the various bodies of the Financial Stability Board, so that the global standards reflect the heterogeneity of financial sectors across the world.