Introduction

Ever since the Asian crisis, the issue of a ‘new international financial architecture’ has been high on the agenda of representatives of international organisations, the global financial community, and academic circles. In the immediate aftermath of the crisis, a consensus that ‘something needs to be done’ seemed to have emerged. But reaching consensus on a theoretical level on what exactly should be done has almost been as hard to achieve as implementing any reforms, as the postponed implementation of the Basle Accord shows.

No matter what specific economic theory one wants to draw upon, three elements are systematically needed in order to derive feasible or implementable policy advice. The first is a justificatory or legitimating exercise and is thus a normative endeavour. If an international regulation of international financial markets is pleaded for, there must be some procedure justifying not only regulation as such but also regulation on a specific level, here the international one. The second necessary element is positive: we need to have at our disposal knowledge concerning the alternative consequences that a variety of potentially possible rules would cause. Without solid positive knowledge, no serious policy advice is possible. The third element derives policy advice on the basis of this positive knowledge.