Globalisation has transformed the financial sector into a complex and interdependent worldwide network. Faced with daily transactions that exceed the gross domestic product of large nations, purely state supervision is showing its limits. A local financial failure can quickly trigger a global shockwave, as successive crises have shown. This reality has led to the creation of an ecosystem of international financial institutions, a heterogeneous set of organisations, committees and forums whose role is to preserve stability and lay down common rules. Understanding this architecture has become essential for economic players. This article provides an overview of the main pillars of this global financial governance, a technical field in which the support of an expert is essential. banking and finance lawyer is often invaluable. Each aspect discussed here is the subject of a more detailed analysis in our dedicated articles.
The growing importance of international financial institutions
The need for supranational supervision
The interconnection of financial markets creates a paradoxical situation, often described as the "financial trilemma". It is impossible to reconcile advanced financial integration, system stability and purely national supervisory policies at the same time. National regulators, focused on their own interests, struggle to grasp the risks that extend beyond their borders. This structural failure has led to the need for international cooperation to coordinate supervisory practices and prevent systemic crises. The aim is to create a framework of shared confidence to keep global trade flowing smoothly.
Distinctions: institutions with special vs. general jurisdiction
The landscape of international financial regulation can be divided into two main families. On the one hand, institutions with special competence are entirely dedicated to the financial sector. They may be formal international organisations created by treaty, more informal technical bodies or political discussion forums. On the other hand, organisations with general competence, such as the UN or the WTO, intervene in the financial sphere on a more ad hoc basis, but their influence is no less significant, particularly in terms of the liberalisation of services or the promotion of sustainable finance.
Specialised international organisations: pillars of financial stability
The International Monetary Fund (IMF): guardian of monetary and financial stability
Created after the Second World War under the Bretton Woods Agreement, the IMF's initial mission was to guarantee exchange rate stability. With the end of this system, its role evolved. Today, it acts as the guarantor of the stability of the international financial system as a whole. It does this by providing financial assistance to member countries facing balance of payments difficulties, acting as a lender of last resort to prevent contagion. In return for this aid, the IMF often makes its loans conditional on the implementation of structural reforms and compliance with international financial standards. For a full analysis of its missions, see our article on the International Monetary Fund.
The World Bank: a major player in economic development and financial stability
Often confused with the IMF, the World Bank has a distinct mission. Initially designed to finance post-war reconstruction, it quickly turned its attention to financing the development of emerging countries and the fight against poverty. Its involvement in the financial sphere stems from this core mandate: a stable and efficient financial system is an essential prerequisite for economic development. It therefore supports financial infrastructure projects, participates in the Financial Sector Assessment Program (FSAP) alongside the IMF and acts as a "knowledge bank" by producing benchmark analyses of the global economy. Find out more about the role of the World Bank in our dedicated article.
The Bank for International Settlements (BIS): the bank for central banks and standard-setters
The oldest international financial institution, the BIS is a unique entity. It is often referred to as the "bank of central banks". Its primary mission is to promote monetary cooperation and financial stability among its members, the world's leading central banks. It serves as a discreet forum for discussion and as a provider of financial services. But its most influential role is undoubtedly that of standard-setter. The BIS hosts a number of technical committees, the most famous of which is the Basel Committee, which draw up the prudential standards that are then imposed on banks around the world. For a better understanding of this key institution, read our article on the Bank for International Settlements.
Ad hoc bodies: at the heart of sectoral standardisation
The Basel Committee on Banking Supervision: the Basel agreements
The Basel Committee is the global standard-setting body for prudential regulation of banks. Created within the BIS, it brings together the banking supervisors of the major economies. Its influence is considerable, as it is behind the famous "Basel Accords". These agreements define the minimum capital requirements that banks must hold to cover their risks. From Basel I to Basel III (and its finalisations, sometimes nicknamed Basel IV), these standards have been constantly tightened, particularly after the 2008 crisis, to increase the resilience of the global banking system. To find out more, read our article on the Basel Committee and its influence. These standards form the basis of control mechanisms and prudential rules applied to banks.
The international association of insurance supervisors (aica)
The IAIS is the insurance industry's equivalent of the Basel Committee. Also hosted by the BIS, it brings together regulators from more than 200 jurisdictions, representing almost all of the world's insurance premiums. Its mission is to promote effective and consistent supervision of the sector. To this end, it develops the Insurance Core Principles (ICP) and a common framework (ComFrame) for the supervision of major international insurance groups, contributing to the stability of this vital market.
International Organisation of Securities Commissions (iosco)
IOSCO is the standard-setting body for securities regulators (financial markets in the strict sense). Its members regulate more than 95 % of the world's markets. Its main objectives are to protect investors, maintain fair and efficient markets and combat systemic risk. It establishes regulatory principles and facilitates cross-border cooperation between market authorities, notably through multilateral information exchange agreements to combat market abuse.
Informal financial governance forums: coordination and strategic orientations
The role of the 'g' groups (G7, G20) in global financial regulation
The "Gs", like the G7 and G20, are informal cooperation forums that bring together the leaders of the world's largest economies. Although they have no legal status or permanent secretariat, they nevertheless play a major role in providing political impetus. Since the 2008 crisis, the G20 has become the main forum for strategic discussion on economic and financial governance. It is here that the broad guidelines are defined, which are then implemented technically by institutions such as the IMF and the Financial Stability Board.
The Financial Stability Board (FSB): coordinating and assessing systemic risks
Created by the G20 in 2009 to succeed the Financial Stability Forum (FSF), the FSB is a key component of the post-crisis architecture. Its mission is to identify vulnerabilities in the global financial system and coordinate the actions of the various regulatory authorities. It brings together finance ministries, central banks and the main international standard-setters (Basel Committee, IOSCO, etc.). The FSB does not create standards itself, but promotes their consistent adoption and monitors their implementation by member states. To find out more, see our article on the Financial Stability Board.
The joint forum: managing cross-sectoral problems
The Joint Forum is a technical body set up jointly by the Basel Committee, the IAIS and IOSCO. Its role is to deal with regulatory issues that transcend traditional sectoral boundaries (banking, insurance, securities markets). In particular, it looks at the supervision of financial conglomerates, the giants that operate in all three sectors. His work aims to avoid regulatory arbitrage and ensure a coherent approach to common risks.
General-purpose organisations and their influence on the financial sector
The World Trade Organisation (WTO) and the liberalisation of financial services
Although its main mission is to regulate world trade in goods, the WTO has a direct influence on finance through the General Agreement on Trade in Services (GATS). This agreement includes a specific annex on financial services, which aims to progressively liberalise the banking, insurance and investment markets. WTO rules can thus interact, and sometimes come into tension, with national prudential regulations aimed at stability. Reconciling these two rationales - liberalisation and stability - is a constant challenge.
The united nations (un): promoting sustainable finance and combating illicit flows
The UN is involved in the financial sector in two main ways. On the one hand, its Environment Programme (UNEP FI) has launched major initiatives such as the Principles for Responsible Investment (PRI) to promote sustainable finance and align investments with environmental and social objectives. Secondly, as part of its mission to maintain peace and security, the UN Security Council and its committees, such as the Financial Action Task Force (FATF), play an essential role in the fight against money laundering and the financing of terrorism (AML/CFT).
Organisation for Economic Co-operation and Development (OECD): analyses and standards
The OECD, often referred to as the "club of rich countries", is first and foremost a centre for analysis and discussion of public policy. Its influence on finance is significant. It produces benchmark studies on financial markets, taxation and corporate governance. Above all, it draws up international standards which, although often non-binding, are widely adopted, such as the principles on the automatic exchange of information for tax purposes, which have profoundly changed the landscape of the fight against tax evasion.
The role and support of solent avocats in international banking law
The complexity of the international financial architecture, with its multiple layers of regulations, standards and recommendations, creates a demanding legal environment for companies and financial institutions. The correct interpretation and application of these rules are fundamental to securing operations and preventing risks. Our law firm puts its expertise at your service to help you navigate these regulations. Whether it's compliance issues, cross-border transactions or understanding the implications of regulatory changes, in-depth legal assistance is an asset. If you are faced with the complexity of international banking law and its conflicts of lawsPlease do not hesitate to contact us.
Frequently asked questions
What is the main difference between the IMF and the World Bank?
The IMF focuses on the stability of the international monetary and financial system by acting as lender of last resort for governments. The World Bank's main mission is to finance economic development and combat poverty in low- and middle-income countries.
Why are the Basel agreements important for the banking sector?
The Basel accords define the prudential rules that banks must comply with, particularly in terms of capital requirements. They aim to ensure that banks have sufficient resources to absorb unexpected losses, thereby strengthening the solidity and resilience of individual banks and the system as a whole.
What role does the G20 play in financial regulation?
The G20 is an informal forum for cooperation that provides the political impetus for major reforms in financial regulation. It does not create technical standards itself, but sets objectives and mandates bodies such as the Financial Stability Board to develop them and coordinate their implementation.
Do all international financial institutions have formal legal status?
No. Alongside international organisations created by treaty, such as the IMF, there are 'ad hoc' bodies such as the Basel Committee and purely informal forums such as the G20, which have no legal personality of their own but whose influence is decisive.
How does the wto influence the financial sector?
The WTO influences finance through the General Agreement on Trade in Services (GATS), which encourages member states to open up their domestic markets to foreign financial service providers. Its action is therefore aimed at liberalising trade in banking and insurance services.
What is the Financial Stability Board (FSB)?
The FSB is an international body set up by the G20 to monitor the global financial system and issue recommendations. Its mission is to promote financial stability by coordinating national regulatory authorities and international standard-setting bodies.
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