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IIF Memorandum “Containing Extraterritoriality to Promote Financial Stability”
Extraterritoriality has become a topic of acute interest with the intensification of regulation after the global financial crisis. Despite the fact that the G20 has set ambitious goals for global standards of financial-industry regulation, the fragmentation and risk management challenges arising from increased levels of extraterritorial reach in national legislation are accelerating and constitute an increasing source of concern for the financial industry.
The Institute under the aegis of the IIF Special Committee on Effective Regulation (SCER) the Memorandum “Containing Extraterritoriality to Promote Financial Stability”, which was sent on October 2 to the attention of the Financial Stability Board, as the guardian of global standard setting, to urge it to act to foster more international coordination to head off extraterritoriality.
The Memorandum underlines the need for high-level attention to the practical complexities and inefficiencies arising from the extraterritorial effects of specific national legislation, which and undermines the potential to maximize economic growth on a reasonable and sound basis.
The document, which is not intended to challenge the substance of any regulation, is aimed at describing what is meant by extraterritoriality, underlining the current concerns, and providing some achievable suggestions for limiting or at least managing down the resulting inefficiencies, to enable the FSB to promote smoother implementation of the G20 regulatory objectives.