This article reviews the history of international coordination in the supervision of financial institutions noting why cooperation developed first and has been most extensive in oversight of banks relative to securities firms and insurance companies. It also poses the question of whether the extent of international coordination can be sustained or may even diminish.
The history of international coordination is used to illustrate the hypotheses that cooperation is more likely: the broader the international consensus on policy objectives and the potential gains from cooperation, the wider the international consensus on policy objectives and the potential gains from cooperation, the deeper the international agreement on the probable consequences of policy alternatives, the stronger the international institutional infrastructure for decision-making and the greater the domestic influence of experts who share a common understanding of a problem and its solutions.
All five of these factors that have enabled deepening and broadening of international cooperation have diminished in strength so that international cooperation is not likely to expand and may even be in retreat.
This article clarifies the factors that facilitate international cooperation and highlights the key obstacles to sustaining international cooperation.
