The Role of the Financial Stability Board in the U.S. Regulatory Framework
Prepared remarks submitted to the Senate Committee on Banking, Housing, and Urban Affairs Hearing on "The Role of the Financial Stability Board in the US Regulatory Framework"
The rationale for international financial regulatory coordination at this time – Generally, the US government has the lead in international economic negotiations—as the largest and most developed economy, as the incumbent creator of the rules and institutions started after World War II, often as having the most technical expertise on a given subject, and usually as having the model of a property-rights respecting rule of law in its commercial affairs that other economies wish to emulate or import. But even where the US government is not entirely dominant in the international policy agenda setting, there is room for the US economy and citizens to benefit from international coordination. The rest of the world economy exists, whether or not the US government chooses to engage with other governments in discussion of the rules by which it is partially governed. Economic activities abroad can have significant negative spillovers on US well-being, as well as present opportunities for (mutual) gain to be unlocked. Mostly, though not always, international economic coordination ends up raising standards abroad while constraining harmful behaviors in the United States that we would wish to limit anyway – and in fact, our own government's legislated intent is often more effectively applied by making it harder for US entities to skirt domestic regulations by moving abroad.