Emory Corporate Governance and Accountability Review


Yussuf A. Aleem


The regulation of global finance comprises an unorthodox legal framework. Unlike other areas of economic regulation or international law, more generally, this framework is not directed through intergovernmental organizations with formal legal status. Moreover, commitments (or best practice standards) made by various regulatory officials are non-binding and subject to significant variation. This departure is especially unique when comparing financial regulation to areas such as international trade law or environmental law.[1]

The purpose of this Paper is to provide a positive analysis explaining the prevalence of this form of “soft” law, and normatively suggest why such a framework is the optimal form of regulation in this arena. In doing so, I first explain the need for financial regulation, the transboundary nature of financial systems, and other unique features endemic to global finance, including the need to account for dynamism, complexity and sovereignty considerations. I compare the financial regulatory framework to the formal treaty-making process used in international environmental law as well as the experiences of the World Trade Organization (WTO). I then address certain criticisms of the current regulatory framework and identify areas where there may be room for improvement, including enhanced administrative law mechanisms and increased participation from the Global South.

[1] This Paper contrasts the global financial regulatory experience to that of international environmental law for several reasons. First, both areas of regulation are transboundary in nature. Climate change, like financial contagion, does not stop at a national border. International environmental law is also a developed area of law—there are thousands of bilateral and multilateral treaties. This Paper also compares global financial regulation to the experiences of international trade law. This comparison is useful considering that both domains concern economic policy as well as the WTO’s oft-mentioned dispute mechanism system.