Why are international regulatory standards not set? While most of the literature focuses on explaining positive cases of standard-setting where international rules are agreed upon, weak or negative cases remain prevalent and yet surprisingly under-explored. To explain these cases in the area of financial services, we integrate an inter-state explanation, which focuses on competition between major jurisdictions, with a transgovernmental explanation, which relates to conflict between different regulatory bodies at the international level. We also consider how these dimensions interact with financial industry lobbying. This allows us to construct a typology differentiating between distinct types of cases concerning international standard-setting: (1) absent standards, (2) non-agreed standards, (3) symbolic standards, and (4) agreed standards. The explanatory leverage of our approach is illustrated through a systematic structured focused comparison of four post-crisis cases related to “shadow banking.” The article generates novel insights into regulatory conflicts and the scope conditions for international agreement.

I study a model of self-fulfilling bank runs where government-provided deposit insurance covers small (retail) deposits but not large (wholesale) deposits. The share of the banking system that may be affected by runs depends on the distribution of retail and wholesale deposits across banks. The magnitude of runs is minimized if banks with both retail and wholesale depositors (reminiscent of commercial banks) coexist with banks that cater only to wholesale depositors (reminiscent of shadow banks). The shadow banking sector should be large enough to absorb enough wholesale deposits from commercial banks to keep them shielded from runs. In a decentralized equilibrium, the magnitude of runs tends to be larger than optimal as a result of wholesale depositors’ incentive to invest in the banks with the highest share of retail depositors.

Little has contributed more to the emergence of today's world of financial globalization than the setup of the international monetary system. In its current shape, it has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore – a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007–9 Financial Crisis, this ‘Offshore US-Dollar System’ has been backstopped by the Federal Reserve's network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy.

We propose a simple short-run Post-Keynesian model in which the key aspects of shadow banking, namely securitization and the production of structured finance instruments, are explicitly formalized. To the best of our knowledge, this is the first attempt to broaden purely real-side Post-Keynesian models and their traditional focus on shareholder-value orientation, the financialization of non-financial firms, and the profit-led vs. wage-led dichotomy. We rather put emphasis on the role of financial institutions and rentier-friendly environment in determining the predominance of specific growth and distribution regimes. First, we illustrate the macroeconomic rationale of shadow banking practices. We show how, before the 2007–08 crisis, securitization and shadow banking allowed for an increase in profitability for the whole financial sector, while apparently keeping leverage under control. Second, we define a variety of shadow-banking-led regimes in terms of economic activity, productive capital accumulation, and income distribution.

The shadow banking system is the one that conducts credit, maturity and liquidity transformation outside regular banking mechanisms. Chinese practices largely fit into this concept. However, unlike their foreign peers, Chinese shadow banking institutions have been intertwined into a complex whole and have achieved credit intermediation usually through wealth management products, often using the problematic asset-pool model. They are also substantially influenced by the unique political economic dynamics in China, such as the rigid financial licensing regime and credit policy control. Both the supply and demand ends of funding have provided those activities with new features, for instance, the P2P lending marketplaces and local government financing vehicles. Chinese government agencies have interplayed responsively and proactively with the market via rulemaking and enforcement, in particular recently, with the aim to fix loopholes, level the playing field and limit regulatory arbitrage. However, further efforts are imperative in order to develop moderate and appropriate regulation and draw clearer legal boundaries.