Patchwork regulation threatens global growth, warns IFAC
IFAC has called on governments around the world to follow a set of 10 principles to ensure consistent, high-quality global regulation to aid global economic growth.
The 10 principles were identified by 30 senior executives and experts from regulatory agencies, financial markets, government, academia, listed companies, investment funds, and the accounting profession at a roundtable in Hong Kong convened by IFAC in partnership with the Hong Kong Institute of Certified Public Accountants (HKICPA).
The 10 principles are as follows:
To serve the public interest, regulation needs to be evidence-based, proportionate, appropriately resourced, collaboratively developed/implemented, consistent, subject to active oversight, systematically reviewed, have clear objectives, and be properly targeted and enforced to address intended issues.
According to IFAC, the principles are intended to help guide regulators toward better decisions and protect the global economy from the dangers posed by a patchwork approach to regulation.
While business and finance are increasingly global, roundtable participants warned that important regulation is not. Instead, it is frequently focused on national interests, which can create barriers and impediments to inclusive growth and jeopardise global financial stability.
“This clear signal from a broad, non-partisan group in one of the world’s most important trading centers highlights the urgent need for a more globally consistent approach to regulation,” said Fayez Choudhury, IFAC chief executive officer.
“We need a clear change in the will — and resources available— for international regulatory cooperation.
“The current fragmentation is creating a regulatory environment that encourages more risky trading and financing activities in often unregulated domains, and allows for the exploitation of gaps in regulation globally,” he said.