1. International transparency requirements and domestic financial regulation Third Annual GATS Seminar on Financial Services British Institute of International and Comparative Law 16 May 2005 Prof. Christine Breining-Kaufmann University of Zurich

2. 2 International organizations stating transparency requirements IMF BIS, IOSCO and IAIS WTO-GATS

3. 3 IMF Articles of Agreement, Article VIII:5 Code of Good Practices on Transparency in Monetary and Financial Policies (1999) –Creates no legal obligations –Provisions form part of the general surveillance activities by the IMF and are included in lending programmes –Considerable practical impact Reports on the Observation of Standards and Codes –The main tool for monitoring compliance with the Code of Good Practices on Transparency in Monetary and Financial Policies.

4. 4 BIS Three types of regulations: –Minimal standards 1988 Basel Capital Accord and the revised framework –Best-practice papers on risk management issues Liquidity risk and interest rate risk –The Core Principles for Effective Banking Supervision BCBS regulations –Legally non-binding –Politically binding

5. 5 Transparency requirements in the Basel framework Goals –To facilitate banking supervision –To identify potential risks Core Principles for Effective Banking Supervision: „... supervisors should encourage and pursue market discipline by encouraging good corporate governance... and enhancing market transparency and surveillance.“ Provisions related to transparency in Basel II –Paragraph 91: Access/transparency in ECA –Paragraph 779: Transparency as part of the supervisory process

6. 6 IOSCO and IAIS IOSCO –Objectives and Principles of Securities Regulation (1998) IAIS –Principles Applicable to the Supervision of International Insurers and Insurance Groups and Their Cross-Border Business Operations (1999) BIS, IOSCO and IAIS joint reports –Supervision of financial conglomerates –Initiatives to combat money laundering and the financing of terrorism –Compliance function in banks

7. 7 WTO-GATS Article III Transparency –Predictability for market participants –Contributes to transparent decision-making Article VI:4 GATS Domestic regulation –Mandate for developing disciplines –Accountancy GATS Annex on Financial Services –Prudential carve-out –Relationship to Article VI:4 GATS

8. 8 Relationship between different international transparency requirements IMF and WTO-GATS –Agreement between the IMF and the WTO (1996) Exchange of and access to information Observer status of IMF and World Bank in the Dispute Settlement Body BIS and WTO-GATS –No institutionalized dialogue between the WTO and the BIS

9. 9 Implications for domestic regulation Different transparency standards Different objectives Different legal nature –Binding treaty law – GATS –Soft law – BIS –Hardening soft law – if the WTO were to refer to the BIS standards

10. 10 Open issues Relationship between WTO-GATS and IMF obligations. Can they mutually enforce each other? Content of prudential carve-out and its relationship to standards outside the WTO framework? Legal quality of de iure non-binding standards if applied within GATS framework? How to coordinate standard setting activities within WTO and IFIs?