International financial architecture and international financial standards

The international financial architecture literature is concerned with a set of best principles and practices that may lower the risk of financial crises and spillover effects. The financial world has grown enormously more complicated since the end of Bretton Woods. The valuable work of several standard-setting institutions must be judged as minimum requirements for good practice, which are below the perceived needs of the leading financial centers. The paper proposes a "portal" solution, in which the two most important financial centers, the United States and the United Kingdom, set best practices on international financial standards. Since these two centers control access to international markets, and thus, are the conduit of systemic risk, they can establish both the rules for market access and the core regulatory and supervisory framework to deal with international systemic issues. The regulators of the two portals therefore play the fundamental international regulatory role.