FINANCIAL REGULATION AND GENERAL AGREEMENT ON TRADE IN SERVICES (WTO)

Optimal level of regulation and regulatory reform seem to be an
undisputed objective . However, in the context of financial regulation there
are differences and disagreements over the optimal level of disclosure of
information and capital adequacy standards. In this paper, instead of offering
a substantive solution , we argue for a competitive process through which the
optimal level of disclosure of information and capital adequacy standards are
likely to emerge. The solution, which we suggest, consists of an international
framework combining competition and co-operation among national
regulatory regimes. We identify WTO/GATS as such a framework, which
facilitates both regulatory competition and regulatory co-operation. The
ultimate outcome of this integrated process, which simultaneously
emphasises liberalisation and regulation of financial markets is the
emergence of an optimal level of regulation related to mandatory disclosure
of information and capital adequacy standards.