28 Sep Why the G-20 Benefits from Avoiding International Law
The essential irrelevance of the United Nations to global economic policy was nicely illustrated this week by President Obama’s trip from New York to Pittsburgh, site of the G-20 summit. Potentially important, even momentous decisions, on economic and financial policy were discussed and maybe even decided there, while the U.N. General Assembly meetings showcased its usual mix of wacky heads of state (Qadafi!) and unbelievably bad traffic patterns.
Still, what exactly is the G-20 and why do we have this weird formal/informal club of countries running things like how much bankers should get paid and banks’ capital reserve requirements? The answer is, I think, that formal international institutions are clunky and often tripped up by basic formalities of the treaty process that creates them. Not so with clubs like the G-20. I have to admit I don’t understand much of what this statement of the result of the summit means, but it sure reads a lot better than any Security Council or General Assembly resolution.
Julian, are you it is accurate to say that they avoid international law? Remember, G-10 played a role in developing the Special Drawing Rights and later set up the original Basel Committee on Banking Supervision, (under the auspices of the Bank of International Settlements, which has an international legal personality) which issued the Basle Concordat in 1975 and the Basel Capital Accord in 1988 (both with later revisions). Since the late 70s the G7/8 has been functioning in this role of coordinating certain international monetary and financial regulatory issues. Now, this is certainly not more than soft law, but not of the unimportant kind: Dan Tarullo (Georgetown Law and member of the Board of Governors of the Fed) writes in his recent book Banking on Basel: The Future of International Financial Regulation that the revised Basel Framework (“Basel II”) was “extremely ambitous”, its policy implications “far-reaching”, its “impact on domestic banking regulation and on international cooperation in supervising internationally active banks is self-evident”. I believe international lawyers do themselves a disservice by letting this form of governance (or “multilateral diplomacy that might have considerable legal implications”) fly under the radar (though they should do so while bearing in mind Pierre-Hugues Verdier’s recent article in Yale Journal… Read more »