From Governance To Government?

Examination Thesis from the year 2012 in the subject Business economics - Economic Policy, grade: 1,0, Copenhagen Business School (Department of Business and Politics), course: International Political Economy, language: English, abstract: The global financial crisis of 2008 has inevitably caused intense debates on the conceptual foundations and the practice of global business regulation. There have been widespread calls for more efficient regulation and supervision of the international financial system, and explicitly, of the banking sector. The Basel Committee on Banking Supervision (BCBS), an international standard setting body constituted by national supervisory authorities, has particularly fallen into disrepute. For the German economist Martin Hellwig, the BCBS seemed to be more ¿an accelerant [to the crisis] rather than an extinguisher¿, which ¿failed marvelously¿. One might or might not agree with him, but it remains to state that the question of legitimacy of cross-border business regulation and its efficiency has been increasingly questioned in the aftermath of the financial crisis: ¿Who governs the globe?¿ ¿In whose benefit?¿ ¿What of democratic sovereignty?¿ Evidently, the future of the BCBS seems to be at stake. Only if its guidelines, based on voluntary recommendations, are perceived as legitimate, the BCBS can continue to exercise its regulatory authority. As Eric Helleiner predicts, financial crisis represent a turning point within the governance of international financial markets: ¿Regulation may be accompanied by a growing fragmentation of international financial governance over the medium term.¿ Aart Scholte also summarizes that ¿the scale, effectiveness, and legitimacy of global governance lag far behind the world¿s needs¿. In this context this paper will examine i) the sources of authority of the BSCS on the basis of the current Basel Accord, also known as ¿Basel III¿, and ii) address the question whether financial regulation can actually be exercised on a global scale or primarily underlies the solely implementation by national governments. The rest of the paper proceeds as follows. Section two begins with a general introduction to the BCBS, its scope of functions and the committee¿s embeddedness in the global business regulatory environment. This is followed by the exposition of the main theoretical framework based on the sources of authority by Avant et al. Section five turns to the analysis of Basel III in accordance with the methodological norms of the previously presented theory. Finally, section five provides a conclusion and answers the initially put question of legitimacy of crossborder business regulation.[...]