What Role for the New Financial Stability Board? The Politics of International Standards after the Crisis

Abstract

Created in April 2009, the Financial Stability Board (FSB) represents the G20 leaders' first major international institutional innovation. Why was it established and what role will it play in global economic governance? The creation of the FSB has been linked to a US-led effort to strengthen an international prudential standards regime that had evolved in the years leading up to the 2007-08 global financial crisis. The FSB faces a number of serious challenges in its new role: developing effective mechanisms for monitoring and encouraging compliance; promoting the development of effective international standards and fostering consensus on their content; establishing its legitimacy vis-à-vis non-members and within member countries; and clarifying its relationship with other global governance institutions. Since these are very difficult tasks, the FSB may be forced to assume a less ambitious role in international regulatory politics than some of its creators initially envisioned. © 2010 London School of Economics and Political Science and John Wiley & Sons Ltd.