US Charts Independent Regulatory Course, Fracturing Post-Crisis Global Banking Accord

A significant rupture is emerging in global financial regulation as the United States deliberately distances itself from the international Basel framework. This strategic shift marks a departure from the hard-won consensus that defined the post-2008 crisis era, signaling a fundamental reassessment of financial risk management driven by domestic political pressures and industry advocacy.The U. S.stance, characterized by a reluctance to implement the stringent final Basel III capital requirements and a scaling back of enforcement, establishes a clear transatlantic divide. European regulators, still haunted by the 2007-09 financial collapse, view any weakening of the global rulebook as a threat to systemic stability and a potential repeat of past crises.Conversely, U. S.officials and financial institutions contend that the American banking system, already the world's most robustly capitalized due to its own post-crisis reforms, would be unduly constrained by additional global capital mandates, potentially stifling economic growth and lending. This regulatory schism introduces substantial risks, including the potential for regulatory arbitrage where global banks might relocate higher-risk operations to more lenient jurisdictions, thereby concentrating systemic vulnerabilities.The fragmentation of the global regulatory landscape undermines the Basel Committee's authority and erodes market confidence in a level international playing field. The long-term implications are profound, raising the unsettling possibility that future financial crises could originate in the gaps between these competing regulatory philosophies.While U. S. policymakers are betting on the sufficiency of their domestic safeguards, this calculated risk carries potential for severe worldwide economic consequences.

#banking regulation

#Basel III

#financial crisis

#US policy

#global finance

#central banks

#featured