BIS warns against fragmented regulation

BIS warns against fragmented regulation

By Chris Giles, Gillian Tett and John Gapper in Davos

Published: January 25 2008 19:34 | Last updated: January 25 2008 19:34

The “Balkanisation of regulation” lies at the heart of the current financial crisis, the head of the central bankers’ bank said on Friday as he called for more global co-ordination to match the increasing integration of the financial system.

In rare public comments, Malcolm Knight, chief executive of the Bank for International Settlements, highlighted the discussions taking place with increasing intensity among world leaders and regulators over how to respond to the credit crunch.

At the World Economic Forum in Davos, Mr Knight said the “major challenge” for regulators was the “the Balkanisation of regulation -- fragmented across market segments, across national jurisdictions and yet we want to have a global financial system”.

His comments echoed other ministers and officials, who are informally discussing at Davos the regulatory response to the financial turmoil.

Gordon Brown, the UK prime minister, called for greater transparency within banks and other financial institutions and for the IMF itself to take on the role of providing an early warning system for the global economy.

Leaders of NYSE Euronext, the US-European exchange group, said on Friday that global regulators were considering telling banks that they must disclose basic data about over-the-counter contracts such as collateralised debt obligations and credit default swaps, many of which have fallen sharply in value in the wake of the subprime crisis.