Club governance and the making of global financial rules

ABSTRACT

Who writes the rules of global finance? This article explains how the transnational financial policy community can influence the content of financial governance by organizing itself via a club model. This agent-centered explanation advances the concept of a club to highlight the mechanisms through which actors operate, the expertise and skills valued by this community and the way in which principles for what constitutes appropriate financial governance are derived. Evidence is provided by an investigation of the Group of Thirty, part-think tank, part-advocacy group, a hybrid organization whose members are active in both the official and private sectors. Club characteristics can be seen in the group's high profile and prestigious membership, which self-presents a strong sense of honor. The article highlights the club as a location for those traditionally understood as financial elites. It emphasizes the collective attributes of the club, such as reputational consistency of membership, but also the importance of a track record of policy work for the enduring relevance of club arrangements in agenda-setting, consensus building and establishing mechanisms for private influence in financial governance. The study draws on 80+ interviews with key stakeholders from the community, including group members, conducted between 1998 and 2010.

KEYWORDS:

• clubs
• derivatives
• financial governance
• securities
• transnational policy communities
• Group of Thirty

ACKNOWLEDGEMENTS

For comments on earlier drafts, I wish to thank Andrew Baker, Cornel Ban, Martin Carstensen, Richard Ecclestone, Stine Haakonsson, Lasse Folke Henriksen, Manuela Moschella, Leonard Seabrooke and Geoffrey Underhill.

Notes

1. This section uses direct quotes from interviews with G-30 members: Geoffrey Bell (London, 2001), Andrew Crockett (Basel, 2000), John Heimann (Basel, 2000), Peter Kenen (Washington, DC, 1999) and Tommaso Padoa-Schioppa (Paris, 2008).

2. Interviews with group Executive Director and Institute of International Finance official (Washington, DC, 1999).

3. Detractors argue that group members are conventional in their thinking and have an ‘impulse to leave well enough alone’ (Koenig, 1982: 420). Others maintain that groups like the G-30 are vehicles for the policy community to retain power, though they do not doubt the members’ honorable intentions (Interview with Professor of Finance, Washington, DC, 1999).

4. Interview with officials at the Securities Exchange Commission (Washington, DC, 1999).

5. Special groups were formed in Australia, Canada, Hong Kong, Japan, the United Kingdom and the United States. Switzerland undertook monitoring through pre-existing arrangements. Austria, Denmark, France, Germany, Italy, the Netherlands, New Zealand, Norway, Spain and Sweden produced special status reports. In 1992, reports were also provided by 14 emerging market countries.

6. Interview with OCC official (Washington, DC, 1999).

7. Interview with Kenen. Interview with former Bank of England official (London, 2000).

8. Interviews with Congressional staff (Washington, DC, 1999) suggest that legislators were alert to the global nature of the issue and reluctant to push ahead in a national context. At the same time, interviews with regulators and supervisors from that period show significant concern at the relative ignorance of legislators on financil matters.

Additional information

Notes on contributors

Eleni Tsingou

Eleni Tsingou is Assistant Professor in International Political Economy at the Copenhagen Business School. Her research focuses on global financial governance, policy clubs and the role of professions and professionals.