Trade Liberalization and Prudential Regulation: The International Framework for Financial Services

This article provides an overview of the issues involved in international efforts to open and restructure markets for financial services and to ensure adequate regulation and supervision of financial firms. It discusses the liberalization in the General Agreement on Trade in Services (GATS), the first global trade agreement to cover financial and other services, and the roles of various international fora in strengthening national regulatory and supervisory systems and enhancing cooperation and coordination between supervisors. The article emphasizes that measures to liberalize trade in financial services and measures to strengthen prudential regulation and supervision are complementary and mutually reinforcing.