The GATS Agreementon Financial Services: A Modest Start to Multilateral Liberalization

Financial Services and the WTO: Liberalisation Commitments of the Developing and Transition Economies

“…Could it be that the markets in these countries are already so competitive that liberalisation of further entry would only have a limited impact on firm performance? Evidence presented in Sorsa (1997) leads to the opposite conclusion. She finds that crude concentration ratios -defined as the share of the largest bank in total banking assets -are somewhat higher in developing and transition markets than in industrial countries.…”

“…In any case, as noted above, for most countries studied here, there were no immediate benefits in terms of improved access to foreign markets, so, in addition to any foreign political pressure and the promise of future rewards, the motive for liberalisation must have been based on domestic policy considerations. 42 Unless, of course, there was significant binding below the status quo in 1995, which Sorsa (1997) argues was the case. This section relies on research by Masamichi Kono.…”

Trade in Financial Services, Capital Flows, and the Value‐at‐Risk of Countries

“…While such measures shall not be used as a means to circumvent a country's commitments or obligations under the GATS, they do not need to be inscribed in the Schedules of Specific Commitments, whether or not they are in conformity with any other provisions of the agreement. However, there is no definition of prudential rules, and as Sorsa (1997) argues, the broad prudential carve-out in the GATS can imply very broad departures from the basic principles of the agreement. Potentially, the measures can permit discrimination among countries, for example, on the basis of capital adequacy ratios or discretion in approving banking licences, which can go against the MFN principle or national treatment.…”

“…Finally, recognising that financial instability and external imbalances may be closely intertwined, the GATS also allows members to introduce temporary restrictions in the event of serious balance of payments problems -subject to consultations with WTO members (Article XII). However, as Sorsa (1997) argues, the role of the WTO Committee on Balance of Payments Restrictions appears vague, given that the IMF independently approves restrictions on current account payments that fall under its jurisdiction. As a matter of fact, if a particular restriction on payments and transfers is approved by the IMF, the BOP Committee's role may be limited to improving what the Fund has already done under its mandate.…”

Financial Innovation and Prudential Regulation – The New Basel III Rules

“…129 The fact that -unlike other public policy exceptions such as national securityall prudential measures are considered necessary, does not resolve the issue of whether a measure is prudential or is being used to avoid the obligations of the Agreement. 130 If the latter is established, then a prudential measure could still be outlawed. Crucially, however, the structure and wording of paragraph 2 seem to call for judicial restraint.…”