The Flaws of Fragmented Financial Standard Setting: Why Substantive Economic Debates Matter for the Architecture of Global Governance

Daniel Mügge, James Perry

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    In the half decade following the 2007 financial crisis, the reform of global financial governance was driven by two separate policy debates: one on the substantive content of regulations, the other on the organizational architecture of their governance. The separation of the two debates among policymakers has been mirrored in academia, where postcrisis analyses of financial governance have remained detached from reinvigorated discussions about the nature of financial markets. We argue that this separation is deeply flawed. Presenting an analysis of interactions between standards for banking, credit rating, accounting, and derivatives trading, this article demonstrates why the appropriateness of the organizational architecture of global financial governance is necessarily contingent upon one’s understanding of how financial markets work. In particular, if financial markets are not anchored to external “economic fundamentals” but instead exhibit reflexivity, then the reciprocal interactions between different regulatory arenas demand considerably more organizational coordination than presently exists.
    Original languageEnglish
    JournalPolitics and Society
    Volume42
    Issue number2
    Pages (from-to)194-222
    ISSN0032-3292
    DOIs
    Publication statusPublished - 2014

    Cite this

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    title = "The Flaws of Fragmented Financial Standard Setting: Why Substantive Economic Debates Matter for the Architecture of Global Governance",
    abstract = "In the half decade following the 2007 financial crisis, the reform of global financial governance was driven by two separate policy debates: one on the substantive content of regulations, the other on the organizational architecture of their governance. The separation of the two debates among policymakers has been mirrored in academia, where postcrisis analyses of financial governance have remained detached from reinvigorated discussions about the nature of financial markets. We argue that this separation is deeply flawed. Presenting an analysis of interactions between standards for banking, credit rating, accounting, and derivatives trading, this article demonstrates why the appropriateness of the organizational architecture of global financial governance is necessarily contingent upon one’s understanding of how financial markets work. In particular, if financial markets are not anchored to external “economic fundamentals” but instead exhibit reflexivity, then the reciprocal interactions between different regulatory arenas demand considerably more organizational coordination than presently exists.",
    keywords = "Global financial governance, Financial regulation , Accounting standards, Banking regulation, Political Economy",
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    The Flaws of Fragmented Financial Standard Setting : Why Substantive Economic Debates Matter for the Architecture of Global Governance . / Mügge, Daniel; Perry, James.

    In: Politics and Society, Vol. 42, No. 2, 2014, p. 194-222.

    Research output: Contribution to journalJournal articleResearchpeer-review

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    AU - Perry, James

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