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Fragmentation in International Financial Regulation: Rethinking Financial Regulation for a Multipolar World



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Schilling De Carvalho, Pedro  ORCID logo


International standard-setting bodies emerged as the central response to the intensification of cross-border activities. However, shortcomings in their design, the growing fragmentation of markets, and contextual changes – such as the US’ hostility towards multilateralism, the impacts of Brexit, the increasing influence of countries such as China, and nascent markets such as Fintech and Sustainable Finance – point to transformations in international financial regulation. As network governance faces greater constraints, it is fundamental to identify additional and complementary pathways for facilitating cross-border coordination and cooperation in contentious environments; for managing fragmentation and divergence.

This thesis builds on the work on market fragmentation produced by the FSB, IOSCO, and the IMF to understand how deference and comparability-based approaches can facilitate global coordination and cooperation in financial markets outside international standard-setting bodies. Moreover, it analyses how deference and comparability-based approaches can impact the governance of international financial regulation and the interface between the domestic and global levels, especially in instances of market fragmentation and regulatory divergence.

The thesis starts by examining the tools singled out by the FSB and IOSCO as key for coding more flexibility into the international financial architecture: equivalence and comparability-based systems. It identifies what equivalence and comparability-based assessments demand to be carried out, their shortcomings, and the interplay between comparability-based systems and the international financial architecture.

The discussion then moves into how new regulatory networks – whose mandates are not focused on the creation and dissemination of international standards, but rather on capacity-building and knowledge exchange – have emerged in nascent markets, with case studies based on the Financial Conduct Authority-led Global Financial Innovation Network and the Banque de France and De Nederlandsche Bank-led Network for Greening the Financial System. Based on the idea of sequencing, the thesis analyses the use of these new structures as additional pathways for financial regulation.

The examination then goes back to the FSB and IOSCO toolkit to consider the role of bilateral agreements, many of which have been deployed in such nascent markets. Lastly, the role of assessment regimes (such as the RCAP, FSAP, ROSCs, and peer reviews) in managing divergence and enabling a more flexible layer in the international financial architecture – centred around deference and comparability – is discussed.





Ferran, Eilis


Assessment Regimes, Bilateral Agreements, CCDR, Equivalence, Financial Law, Financial Regulation, Fintech, Fragmentation, FSAP, International Financial Regulation, RCAP, Regulatory Networks, ROSC, Standard Setting, Substituted Compliance, Sustainable Finance


Doctor of Philosophy (PhD)

Awarding Institution

University of Cambridge
Cambridge International (Cambridge Commonwealth, European & International Trust). Richard Tee Research Scholarship (Sidney Sussex College).