GEG WP 2015/99 Managing risks, preventing crises: a political economy account of Basel III financial regulations

Abstract

In the aftermath of global financial crisis, the Basel Committee on Banking Supervision quickly issued a new set of global standards. However, it remains puzzling cui bono Basel III has been shaped. Who are the key stakeholders in the regulatory process and to which extent have their geopolitical loci – based on political preferences, geopolitical strategic interests and geographical positions - influenced the final shape of Basel III?

This research sheds light on these questions using a tri-level (domestic, inter-state, global arena), multi-actor approach that captures the complexity of financial regulations. Looking in depth at the net stable funding ratio, capital requirements, French-German ring-fencing lock-in devices, and contingent convertible bonds I show that regulatory change is the product of a constellation of interests of at least two actors, whose loci are not necessarily homogenous.