A global economy needs global regulations.
By Laura Lane, Managing Director and Head of International Government Affairs May 04, 2010 05:30 PM
With a presence in over 100 countries, Citi has a unique perspective on how global markets are interconnected and what the needs of our clients and customers are worldwide. With that vision, we see it as part of our responsibility to work with governments around the world on the development of new regulations for the financial services industry -- regulations aimed not just at preventing another crisis, but also at ensuring the sector's ability to drive growth, create jobs and promote prosperity.
Proposed regulations cover a variety of areas that need reform: transparency, standardization, capital and liquidity requirements, resolution authority and more. And while the need for new rules is clear, so too is the need for governments to develop and implement rules based on a shared understanding of market realities and growth drivers. Put simply, regulators should take a global view when designing rules for a global financial system.
International regulatory convergence -- and simplicity -- will go a long way towards building a financial system suited to the realities of a global marketplace. Economies are no longer separated by national boundaries, and cross-border transactions are critical to building prosperity and creating jobs here at home and abroad.
Of course, all governments have a primary responsibility to serve their own constituents, and individual markets have their own unique needs. But designing national rules with a global worldview encourages trade, promotes integration (which brings countries closer together in important, but often less tangible ways) and reduces opportunities for regulatory arbitrage or gamesmanship.
The financial system will best be able to support growth if the rules of the road don't change when the road travels from one country to another. Coordinated regulation -- through entities like the G2 -- will help create a level playing field that provides a strong platform for prosperity (and which will go far towards preventing the kind of crisis we've just experienced). As our CEO Vikram Pandit has said, "Without global reform, the lessons for any one institution, however well implemented, obviously will have limited value to any one society and to the world as a whole." In short, we need globally coordinated rules governing the financial system to promote a stronger global economy.