Academic

Conglomerate Master Chris Brummer is as close as anyone to international financial law; he sends along the following observations:

Good news from the IMF.  The Executive Board of the International Monetary Fund has approved making financial stability assessments under the Financial Sector Assessment Program a regular and mandatory part of the Fund?s surveillance for members with systemically important financial sectors. By making the FSAP mandatory, the IMF will now examine (on a five year basis) compliance of important financial systems with a variety of international codes and best practices promulgated by international standard setting bodies like the Basel Committee on Banking Supervision, the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors.

Although these reforms do not go as far as I have pressed, they do go a long way to speaking to problems under the program that I have addressed before, namely the voluntary nature of the program and the limited scope of financial regulatory surveillance, especially with regards to larger wealthier countries that do not depend on the IMF for emergency financing.   In the future, additional reforms, however, should be considered, including scoring countries with regards to their compliance with international best practices, optimizing the format in which assessments are made (the documents are pretty turgid, to say the least), and robustly publishing the results of assessments for investors and other stakeholders.  But all in all, nice work by the staff, which will more than likely make the ?soft law? of international finance considerably ?harder? and more consequential.