International Banking Regulation and Financial Stability
Summary
International banking regulation comprises a suite of standards, supervisory frameworks and cooperative arrangements designed to safeguard the resilience of banks and the stability of the global financial system. Since the global financial crisis of 2007–2008, regulators have strengthened capital and liquidity requirements, introduced macroprudential tools to address systemic risk and enhanced cross-border cooperation to manage contagion. Key pillars include minimum capital adequacy ratios, liquidity coverage standards and recovery and resolution planning. These measures aim to ensure that banks can absorb losses, meet short-term obligations and maintain critical functions during periods of stress. Effective regulation balances safety with efficiency, avoiding undue constraints on credit provision while preventing excessive risk-taking. In practice, the evolving landscape of bank supervision reflects ongoing efforts to close regulatory gaps, mitigate arbitrage opportunities and align national frameworks through mutual recognition, information-sharing and common enforcement mechanisms. The ultimate goal is to promote durable financial stability, protect depositors and underpin sustainable economic growth across jurisdictions.
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International Banking Regulation and Financial Stability publication trend
The graph below shows the total number of articles in international banking regulation and financial stability across all publications each year (not limited to Nature Index journals).
Technical terms
Regulatory arbitrage: The practice by which financial institutions exploit differences in rules or regulatory regimes across jurisdictions to reduce costs or capital requirements.
Swap spread: The difference between the fixed rate on an interest rate swap and the yield on a government bond of comparable maturity, often used as an indicator of credit and liquidity risk in the banking sector.
Macroprudential regulation: A policy approach focused on monitoring and mitigating systemic risks to the financial system as a whole, through tools such as countercyclical capital buffers and sectoral capital requirements.
References
- Unintended Consequences of the Global Derivatives Market Reform. Journal of the European Economic Association (2024).
- Regulatory arbitrage and loan location decisions by multinational banks. Journal of International Economics (2023).
- Uneven regulatory playing field and bank transparency abroad. Journal of International Business Studies (2022).
- International cooperation on financial market regulation. International Economics and Economic Policy (2021).
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