In the aftermath of the financial crisis, the national and international response by legislators and regulators has been to substantially overhaul and increase financial regulation applicable to banks and other financial institutions. The primary objectives behind these reforms were to restore financial stability and confidence to the international financial markets and to put in place a regulatory framework to minimize the risks of failures of major financial institutions. In addition, in circumstances where an institution does fail, the aim is to minimize systemic consequences for the wider financial market and avoid the need to use public funds to bail out or support failing institutions.

Much of the regulatory response to the financial crisis has been coordinated at an international level through the G-20 group of countries, which has worked closely with global bodies responsible for setting international standards for financial oversight and regulation, including the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO). The international standards arising from these bodies must be implemented separately by national legislators, giving rise to differences in interpretation and implementation in different jurisdictions. The approach of the European Union to financial regulation has to be viewed in the context of these international standards.

Originally published in Law360, New York on September 21, 2016.