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ISSUE 2010/07



by Stéphane Rottier SUMMARY The financial crisis has intensified the focus on financial regula-
National Bank of Belgium
tion at global level, placing it at the top of the G20 agenda. However, global
convergence is made more difficult by financial multipolarity, meaning the
and Nicolas Véron
Senior Fellow at Bruegel rise of emerging economies and its impact on decision-making at global level, and financial reregulation, or the trend towards stronger regulation of

financial systems to buttress financial stability, particularly in developed

economies. As a result, the ambitious objectives initially set by global
leaders have so far not been turned into major international break-
throughs, and continued global capital-market integration can no longer be
taken for granted.

The global harmonisation of all aspects of financial regulation cannot be

achieved. Many elements of financial stability and customer-protection pol-
icy can be determined locally. Some competitive distortions and opportuni-
ties for regulatory arbitrage will remain inevitable. But action is needed at
global level to prevent damaging fragmentation of capital markets. Policy
makers should prioritise four key components: (1) building stronger global
public institutions, to get a
Scoring of G20 financial regulation action points,
by type of institution(s) in charge (max = 10)
comprehensive analytical pic-
ture, set authoritative stan-
dards, and foster and monitor

the consistency of regulatory


practice; (2) globally consis-


tent financial information; (3)


a globally integrated capital-


markets infrastructure; and

(4) addressing competitive
distortions among global cap-

ital-market intermediaries.
National Financial BCBS, IASB, IMF
authorities Stability Board IOSCO

Sum of scores on effectiveness, cross-border consistency and follow-up

sorted by leading institution in charge. See Fig. 2 on page 5 for details.

AS THE SAYING GOES, ‘all politics is international ripple effects of the Securities Commissions (IOSCO),
local’, but equally ‘all economics is bankruptcy of Germany’s Herstatt created in 1983 from a pre-exist-
global’ and regulation is one arena Bank led to the formation by the ing pan-American regional associ-
in which they meet and conflict1. G10 Central Bank Governors of the ation formed in 1974. Insurance

This has been particularly true for Basel Committee on Banking oversight is discussed within the
financial regulation in the wake of Supervision (BCBS) hosted by the International Association of
the unprecedented financial crisis. Bank for International Settlements Insurance Supervisors (IAIS),
Financial regulation has been her- (BIS, established 1931). In the established in 1994. Public-sector
alded as a top priority by the newly 1980s, as the savings and loan audit supervisors, set up in the US
prominent G20. But almost two crisis led to tighter capital regula- and elsewhere after accounting
years on the feeling prevails, espe- tion in the US, American banks scandals including the Enron col-
cially in Europe, that the results successfully argued that equiva- lapse in the early 2000s, estab-
have not matched the initial ambi- lent regulation should be imposed lished the International Forum of
tion. This warrants a reconsidera- on banks in other jurisdictions, Independent Audit Regulators
tion of the global financial especially Japan. Thus in 1988 the (IFIAR) in 2006.
regulatory agenda. All things being BCBS produced the first Basel
equal, consistent regulatory Capital Accord. Risk weighting Beyond these sector-specific ini-
choices across the globe are under this agreement was subse- tiatives, the late-1990s emerging-
preferable, but achieving consis- quently deemed too crude to be market crises proved that vulnera-
tency involves difficult political effective, and in 2004 the BCBS ble financial firms could cause
and economic trade-offs. produced a new accord known as international macroeconomic
Basel II. instability. In response, finance
1 THE RISE OF GLOBAL FINANCIAL ministers and central bankers
REGULATION Separately, a global financial from developed and developing
reporting and auditing framework countries met in different forums,
‘Financial regulation’ commonly emerged, at first at the initiative of successively the G22 (1998), G33
indicates a cluster of interrelated the private-sector accounting pro- (early 1999) and eventually the
1. Credit is due to policies designed to ensure the fession through the International G20 (late 1999). Simultaneously,
Michael Gadbaw for this proper functioning and the Accounting Standards Committee developed countries established
use of the late US politi-
cian Tip O’Neill’s prover- integrity of the financial system, (IASC) in 1973 and the the Financial Stability Forum
bial saying on politics. including public regulation and International Federation of (FSF) to enhance their coordina-
2. The G10 , established supervision of bank capital, lever- Accountants (IFAC) in 1977. The tion and foster global standards.
in 1962, is composed age, liquidity and risk manage- IASC was made independent from Also in 1999, the International
of Belgium, Canada,
France, Germany, Italy, ment; control of moral hazard and professional bodies in 2001 and Monetary Fund (IMF) was tasked
Japan, the Netherlands, financial industry incentives; cus- renamed the International with assessing national regulatory
Sweden, the UK, the US,
as well as Switzerland tomer protection; and regulation of Accounting Standards Board and supervisory frameworks
which formally joined in capital markets. Capital-flow con- (IASB). Many countries have through the Financial Sector
trols, prevention of money laun- agreed to adopt the IASB’s Assessment Program (FSAP)4.
3. The US is the main dering and taxation of financial International Financial Reporting
outlier. Japan has not
made IFRS mandatory, activities can overlap with this Standards (IFRS) following the pio- The present crisis has further
but allows companies
to use them instead of
agenda but are not in a strict neering decision of the European enhanced the status of financial
national standards. sense about financial regulation. Union in 2000-023. regulation from a technical issue
4. This programme is
dealt with by specialised bodies to
jointly operated with Until the 1970s, financial regula- Securities regulators coordinate at a matter of relevance for political
the World Bank when
applied to developing
tion developed almost exclusively the global level through the leaders. The G7/G8, meeting since
countries. at national level. In 1974, the International Organisation of the 1970s, tended to focus on

Table 1: Major crises and international financial regulatory initiatives lation remains a comparatively
First world war/German reparations BIS 1931 immature component of interna-
Great Depression/second world war/post-
tional economic policy.
IMF, World Bank, OECD 1945-48

war reconstruction
Herstatt Bank failure BCBS 1974 2 THE NEW CONTEXT: MULTI-
Basel Capital Accord 1988
savings and loan crisis
Transition in ex-communist countries EBRD5 1991 Policy outcomes will be shaped by
Asian financial crisis FSF, FSAP, G20 1999 two major shifts, which we may
Enron/various accounting scandals IFIAR 2006 call financial multipolarity and
Current crisis G20 Summits, FSB 2008-09 reregulation. The first predates the
crisis but was arguably reinforced
international macroeconomics corresponding conceptual and by it, while the second is a direct
and trade, but G20 summits since analytical foundation is less solid consequence of it.
2008 have looked extensively at than for, say, trade and interna-
financial regulation, which was the tional macroeconomics, which By financial multipolarity we
focus of no fewer than 39 out of have been topics of intense eco- mean that the geography of global
the 47 action points in the first nomic research and negotiation finance is rapidly evolving from a
G20 summit declaration for decades. mainly North-Atlantic focus
(November 2008). In April 2009, towards a much broader canvas.
G20 leaders extended the FSF to The substantial body of literature Notwithstanding the 1980s bub-
major emerging economies, and on financial markets and interme- ble in Japan, the joint dominance
renamed it the Financial Stability diaries has long been only tenu- of the US and Europe in financial
Board (FSB). The memberships of ously linked to mainstream matters has long looked resilient,
the BCBS and other Basel-based economics. The impact of many in spite of the rapid catch-up
committees were also extended to regulatory issues on specific mar- growth of emerging economies.
include all G20 countries. ket participants has also made But the centre of gravity of global
this policy area prone to various finance is now moving eastward.
Because financial regulation only forms of private-sector capture. Among the world’s 100 largest
recently became a major interna- Consequently, while it has gained listed banks by market
tional economic-policy issue, the great prominence, financial regu- capitalisation, the share of emerg-
ing markets has surged from
Figure 1: Global 100 largest listed banks, distribution 1996-2010 almost none to more than a third,
more than either the US or Europe
(Figure 1), part of which is

explained by the extraordinary rise

United States
in value of major Chinese banks
since their initial public offerings
in 2005-06. Even though their

international activity remains lim-


20% ited for the moment, these new

entrants represent a major change
Emerging economies Canada and
Japan Australia
in the global landscape.

Looking at global financial centres 5. European Bank for


Reconstruction and













rather than firms, a similar picture Development

Distribution of aggregated market capitalisation by country of headquarters. Source: FT Global
500 rankings, authors’ calculations.

emerges: Table 2 shows that Asian sponding disillusionment about much financial business remained
centres are hot on the heels of the economic benefits of unfet- highly regulated, there was a trend
London and New York in the global tered finance, leading them to con- towards liberalisation and reliance
pecking order.6 To chase high sav- strain the financial industry in new on market discipline during the

ings and sovereign wealth, asset ways. For example, the US Dodd- two decades that preceded the cri-
management teams, which a Frank Act of July 2010 introduces sis. The new trend does not mean
decade ago would have chosen significant changes in many areas that no financial activities will
London or New York as their obvi- and contrary to most suggestions escape regulation in the years
ous location, increasingly base from the financial industry7. The ahead, but it is nevertheless mak-
themselves in Dubai, Hong Kong or EU has similarly initiated new ing its impact felt and is attracting
Singapore. Over the next decade, financial legislation. In emerging solid cross-partisan political con-
the combination of deleveraging in economies, finance is typically sensus in most major developed
the West and continued financial more tightly regulated, and in economies.
development in emerging many cases largely or almost
economies will certainly reinforce totally state-owned8. Several such 3 LIMITS AND PRIORITIES OF
the trend towards multipolarity, countries may in the years to INTERNATIONAL COLLECTIVE
with a resulting shift of power in come move towards further liberal- ACTION
the global financial policy debate, isation of their financial system to
even if emerging countries have boost credit development and The consequences of financial
been discreet in these so far. An growth9. But this is unlikely to multipolarity and reregulation
additional factor is that the crisis hamper the drive towards reregu- may be more profound and wide-
has dented what previously lation in richer economies with a ranging than has often been
seemed to be western intellectual high level of financial develop- acknowledged. They make global
leadership in financial matters. ment. financial regulatory harmonisa-
tion a more distant prospect than
Financial reregulation refers to Reregulation should not be seen was the case before the crisis. It is
6. Unfortunately, both the heightened concern of policy- as a sudden, across-the-board par- easier to harmonise when there is
rankings were intro- makers in developed economies adigm change, but rather as a hegemony of one country or one
duced too recently to be
used to analyse about financial stability, and corre- long-term trend reversal. While bloc than when many diverging
mid-term trends. voices need to concur for a deci-
7. See for example
Table 2: Two league tables of global financial centres sion to be made. It is also easier to
Graham Bowley and Eric
Dash, ‘Wall St. Faces harmonise rules in an era of dereg-
International Financial Centres
Specter of Lost
Development Index
Global Financial Centres Index ulation, by reaching agreement on
Trading Units’,
The New York Times, a low common denominator, than
New York 88.4 London 775
6 August 2010 when expectations are raised as to
London 87.7 New York 775
8. Patrick Foulis, ‘They what the rules should achieve and
Tokyo 85.6 Hong Kong 739
Might Be Giants : Special these expectations differ from one
Report on Banking in Hong Kong 81.0 Singapore 733
Emerging Markets’, jurisdiction to another.
The Economist, Paris 72.8 Tokyo 692
15 May 2010 Singapore 70.1 Chicago 678 Today’s multipolar financial world
9. See for example, ‘A Frankfurt 64.4 Zurich 677 is one in which levels of financial
Hundred Small Steps:
Report of the Committee
Shanghai 63.8 Geneva 671 development vary hugely. As a
on Financial Sector Washington 61.1 Shenzhen 670 consequence, not only do prefer-
Reform’, headed by
Raghuram Rajan, Sydney 59.5 Sydney 670 ences differ but governments’
Government of India
Planning Commission,
Source: Xinhua-Dow Jones IFCD Index, July 2010; Z/Yen and City of London, 7th Global interest in financial regulation,
Financial Centres Report, March 2010.
2009 and technical capacity to discuss

it, are also unequal. In certain been for a long time. resources, the more effective the
cases, authoritarianism or a fierce implementation.
commitment to sovereignty may The combination of financial multi-
limit the scope of global agree- polarity and reregulation also Given the reluctance to delegate

ment. By the same token, multipo- reduces the relative effectiveness formal powers to the supranational
larity means that the range of and increases the complexity of level, accentuated by differences
regulatory issues on which devel- soft coordination, which in turn of financial-industry structures
oped countries can negotiate an gives more salience to formal, across jurisdictions (such as the
agreement and then impose it often legally grounded processes. dominance of universal banks in
upon the rest of the world is dwin- The high level of voluntary cooper- the EU, state-owned banks in
dling rapidly. These limitations are ation among central banks developing countries, and differ-
likely to become increasingly visi- throughout the crisis provides a ences between common-law and
ble in the next few years. In the counterexample, but unique speci- civil-law systems), global financial
current context, harmonisation ficities of central banking mean regulation will be unable to provide
efforts might only lead to weak this cannot provide a template for a seamlessly integrated, global
global standards, necessarily com- regulatory policy. level playing field in which all
plemented by tougher rules in financial intermediaries can com-
countries with higher regulatory Figure 2 scores the 39 financial pete fairly on all markets, inde-
expectations. regulation action items in the first pendently of their country of
G20 summit declaration. For each origin. From this perspective, it
The shift to reregulation also item, we have graded effective- should not be a surprise if the
transforms the position of several ness of implementation, cross-bor- eventual outcome of the ‘Basel III’
actors, and especially the EU. In der consistency and follow-up discussion, due in November
the previous phase, EU institutions initiatives until now. The analysis 2010, is not deemed demanding
were instinctively internationalist, shows that the more the imple- enough to meet the reregulation
as global initiatives could be effec- mentation of the action item requirements of several key coun-
tive drivers of intra-EU harmonisa- depends on action by an interna- tries (possibly including the US,
tion. The adoption of IFRS in tional body with significant auton- UK and Switzerland) in spite of the
2000-02 is a quintessential case. omy in administration and achievement of concluding such a
It enabled unification of account-
ing standards throughout the EU, Figure 2: Scoring of implementation of financial regulation action
where previous EU-only efforts to points in the November 2008 G20 Declaration,
achieve that aim via directives had by type of main decision-making institution
failed. But now, such dynamics are 10
becoming unlikely as more EU- 9 Effectiveness(max. 5)
specific political objectives are fed 8 Cross-border consistency (max. 3)
into the regulations. This is illus- 7 Follow-up (max. 2)
trated by growing tensions 6 Total score(max. 10)
between the EU and the IASB 5
(which themselves dampen the
prospects of IFRS adoption in the

US), but also by other cases such


as the Alternative Investment


Fund Managers Directive propos-


als. Reregulation is making the EU

National authorities FSB BCBS, IASB, IOSCO IMF

more unilateralist, as the US has

(8 items) (8 items) (19 items) (6 items)

The data and methodology are detailed in Stéphane Rottier and Nicolas Véron, ‘An Assessment of
the G20’s Initial Action Items’, Bruegel Policy Contribution 2010/08, available on

complex agreement in a fairly lim-
Figure 3: Internationalisation of largest listed banks,
ited timeframe. Similarly, meas-
selected jurisdictions
ures to tackle the moral hazard
inherent in systemically important


financial institutions, on which the

FSB is to produce a report later this

year, and more generally rules that

shape the structure of the finan-

cial industry, such as the ‘Volcker 40% Home country

Rule’ in the US, will predominantly Rest of Europe (EU banks)

belong to the national (or EU)

US (Canadian banks)
Rest of world


Fortunately, many aspects of

EU Canada US Brazil India China Japan

financial stability policy can be

(Top 19) (Top 3) (Top 9) (Top 4) (Top 3) (Top 5) (Top 4)

Average distribution of total 2009 revenue. Source: corporate reports; authors’ calculations.
effectively tackled at local level, Mauricio Nakahodo’s research assistance is gratefully acknowledged.

and diversity of approaches can global collective action, there is a cant positive impact on growth, by
even be beneficial. As Figure 3 risk of fragmentation of global cap- broadening the pool of investors
illustrates, the international activ- ital markets. The economic bene- that capital-hungry economic
ity of large banks is typically less fits of global financial integration actors can tap into, and conversely
than one-quarter of the total. The have been questioned in the case by broadening the range of invest-
main exception is the EU, where a of developing economies10. The ment opportunities for capital
high level of cross-border integra- Asian crisis in particular has led providers 12.
tion and the commitment to a sin- international financial institutions
gle market call for a strong to step back from advocating In other terms, and with due quali-
supranational supervisory frame- unlimited openness to foreign cap- fication, financial integration is a
work, which is currently being dis- ital flows11. But for developed global public good whose benefits
cussed. But elsewhere, even economies, and increasingly for may be at risk in an era of financial
10. See for example multinational groups do not emerging economies as well, there multipolarity and reregulation.
Dani Rodrik and Arvind
Subramaniam, ‘Why did require internationally uniform is wide agreement among econo- Reregulation enhances the risk of
Financial Globalization supervision. The likes of HSBC or mists that the cross-border capital mutually incompatible policies
Disappoint?’, IMF Staff
Papers 56:112-138, Santander illustrate that interna- market integration has a signifi- leading to market fragmentation,
January 2009 tional synergies can arise from the
11. International leverage of technological prowess Figure 4: Net private financial flows to emerging and
Monetary Fund,
or consumer service know-how, developing countries
‘Repeaing the Benefits
of Financial even with locally capitalised and
US$ billions
Globalization’, discus-
funded retail subsidiaries that are
sion paper prepared by
the Research subject to disparate supervisory

Department, June 2007

standards. As for cross-border
12. See William Cline,
retail branches, they are a gener-
Financial Globalization,
Economic Growth, and ally disappearing species follow-
the Crisis of 2007-09,
Peterson Institute ing the Icelandic experience.

for International 200

Economics, May 2010,
for a development of However, some crucial regulatory 100
this argument and
extensive literature
concerns can only be addressed at 0

review. global level. Without adequate


Source: IMF World Economic Outlook database and forecasts, April 2010.

and no single power can exert suf- Woods institutions to Asia. Key pil- not even have a permanent secre-
ficient leadership, benevolent or lars of a global financial body’s tariat. The US Sarbanes-Oxley Act
otherwise, for consistency to be strength include: a transparent of 2002 attempted to grant US
ensured. The crisis itself has governance framework that clearly audit oversight authorities an

stalled the growth of cross-border sets out its mission, properly iden- extraterritorial mandate, but this
financial flows to emerging coun- tifies its stakeholders, and makes has not been accepted interna-
tries, as Figure 4 illustrates. it accountable to them; adequate tionally. The creation of a new
Available data suggest that the and stable financial and human global body (or dramatic stepping-
same is true of global capital flows resources, avoiding funding mech- up of IFIAR’s status) may be
more generally13. anisms that could be leveraged by needed in the future to underpin
special interests to compromise the global integrity of audit
4 A PRACTICAL AGENDA FOR the body’s independence; suffi- processes.
GLOBAL CAPITAL MARKETS cient access to relevant informa-
tion, for which formal Public information on financial
To ensure the sustainability of commitments by national or risks should be enhanced, espe-
financial integration, four compo- regional authorities may often be cially for financial-sector firms.
nents are essential. indispensible; and practice that is Current risk-disclosure frame-
consistent with its proclaimed works, whether as part of IFRS or
The first is stronger global public aims. Specific recommendations Basel II (‘third pillar’), have proved
institutions. The current environ- along these lines are outlined in insufficient, and the malfunction
ment makes this difficult to the following paragraphs. of credit-rating agencies in
achieve, but at the same time assessing structured products has
more necessary as the potential Second, globally consistent finan- compounded the problem. The
for effective voluntary coordina- cial information is crucial. To start publication of ‘stress-test’ results
tion is eroded. Global public institu- with, the IASB needs a sustainable in the US (May 2009) and EU (July
tions help to provide a strategy and governance model to 2010) was linked to the crisis and
comprehensive analytical picture, attract more trust from its stake- may not be made a regular
set authoritative standards, and holders, especially investors process, but regulators must find a
foster and monitor consistency of which are the primary users of way to bring lasting improvement
regulatory practice. Policymakers financial reporting. Instead of hav- to financial risk disclosure. 13. See McKinsey
should build on existing bodies ing each of its standards made Additionally, the public supervi- Global Institute, ‘Global
Capital Markets:
wherever possible, but where suit- mandatory everywhere, an overly sion of rating agencies, which is Entering a New Era’,
able bodies are unavailable, they ambitious aim in the short term, it spreading at a rapid pace15, should September 2009
must also be ready to create new should insist on universal recogni- be strongly coordinated at global 14. These points will be
further developed in a
ones. The G20 has a major role to tion of voluntary IFRS adoption by level in order to safeguard the forthcoming Bruegel
play in empowering such institu- those issuers which desire it. It global consistency of rating publication on
accounting policy.
tions and granting them wide should also monitor better how methodologies.
15. Before the crisis,
acceptance, but it cannot claim to IFRS are applied, in liaison with only the US and a few
represent all countries, and is local authorities. Such measures At an aggregate level, the degree of other jurisdictions such
as Argentina, Mexico
bound to fail if it tries to microman- are needed to prevent the risk of internationally comparable infor- and South Korea for-
age individual topics. The overall this unique experiment in global mation currently available to the mally regulated and
supervised credit rating
geography of global public bodies, standard-setting being derailed14. public on financial systems and agencies. Now
whose symbolic but also practical Equally important is to ensure bet- markets, including disclosures on Australia, the EU, India
and Japan have intro-
impact cannot be overstated, ter consistency of audits. government finances and their duced regulation in this
should be rebalanced, perhaps by Currently, audit firms are only reg- support to financial firms, is area, and several oth-
ers are in the process
relocating one of the Bretton ulated at national level; IFIAR does entirely insufficient. It must be of doing so.

increased. Governments and supervi- activity. Therefore, global or supra- ing. There is no obvious solution to
sors should make a credible commit- national supervision may come hand, and we may have to live for
ment to provide much more earlier to clearing (and perhaps some time with serious competi-
detailed, reliable and frequent trading) platforms than to cross- tive distortions, with players from
information, to be pooled at global border banks. It is also an arguably smaller countries being placed at a
level by the IMF and/or the BIS and more pressing need, given these structural disadvantage. More dis-

to be made publicly available in an players’ central role in shaping cussion is needed on these chal-
appropriate form. global market integration. lenges. A stronger international
competition policy framework
Third, new arrangements are Fourth, capital markets intermedi- may be part of the answer to fight
needed to enable and adequately aries require a global playing damaging economic nationalism
supervise globally integrated cap- field. We argued in the previous by governments as well as preda-
ital-market infrastructure. The section that retail banking regula- tory behaviour by intermediaries.
‘plumbing’ that underpins markets tion can largely be tackled by indi-
for securities and derivatives is a vidual jurisdictions. However, the All in all, the future global financial
big determinant of cross-border activity of investment banks and regulatory landscape is more likely
integration. Most prominently, the of many non-bank capital markets to resemble a Japanese garden,
new trend to have over-the-counter intermediaries tends to be more with new details and perspectives
derivatives cleared by central globally integrated, which is bound emerging at each step, than a cen-
counterparties, or even migrated to create tensions in a world in tralised and symmetrical jardin à
to organised trading platforms, is which supervision is reinforced la française. Consistency will not
to be welcomed but also increases but remains far from internation- be uniformly achieved, the bound-
the risk of fragmentation along ally consistent. Recovery and res- ary between global and local deci-
geographical or currency lines of olution plans, or ‘living wills’, are a sion-making will remain in flux and
markets that until now had novel idea to ensure orderly man- controversial, and a spirit of exper-
achieved global scale. Central agement of failing globally inte- imentation and institutional entre-
counterparties are systemically grated financial institutions, but preneurship will be required. As
important and quintessentially they may increase fragmentation Francis Fukuyama, a political sci-
‘too-big-to-fail’ financial institu- in the absence of an international entist, put it in a lecture in 2005 at
tions, which raises the question of resolution authority. Moreover, Yale University, ‘creating new insti-
how some form of fiscal backstop investment banking arms of uni- tutions that will better balance the
could be put in place if their super- versal banks from large countries requirements of legitimacy and
vision were to be transferred to benefit from the government guar- effectiveness will be the prime
supranational level. However, this antee on their home-country task for the coming generation’16.
is an area where ex-ante burden- deposits and access to central- This general statement certainly
sharing, or a formal agreement by bank funding to an extent unavail- applies to financial regulation.
all or most jurisdictions concerned able to competitors from small
on how to apportion the cost of an countries, which may be ‘too big to The views expressed are those of
international bail-out, is easier to save’ given limited fiscal capacity the authors and not of their
envisage than in the case of at home, and to pure-play invest- employers. The authors are grate-
banks, given the relatively ment banks, which do not have ful to all those who reviewed the
straightforward nature of the access to such guaranteed fund- draft of this policy brief.

© Bruegel 2010. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted in
the original language without explicit permission provided that the source is acknowledged. The Bruegel
Policy Brief Series is published under the editorial responsibility of Jean Pisani-Ferry, Director. Opinions
16. Published in Francis expressed in this publication are those of the author(s) alone.
Fukuyama, America at
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