Countries around the world adopt bank regulation broadly consistent with the framework issued by the Basel Committee because

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BlackTom AI · Accepted Answer

The question asks why countries adopt Basel Committee bank regulation broadly consistent with its framework.
Option 1: 'many countries are bound by a treaty to adhere to the rules the Committee adopts.' This is not accurate in general. While Basel standards are highly influential and many jurisdictions implement them into national regulation, there is no universal binding treaty that compels all countries to adopt every Basel rule. Adoption is typically through national regulatory reform and voluntary alignment with international best practices, not due to a formal treaty constraint.
Option 2: 'it serves the interests of each country to fit in with international standards.' This answer reflects the practical motivation: aligning with international standards promotes financial stability, enables smoother cross-border banking operations, and helps countries access global financial markets. It captures the incentive structure—that jurisdictions benefit from consistency with widely accepted rules, even in the absence of a binding treaty.
In summary, the first option overstates the legal mechanism (treaty binding) and underestimates the voluntary and practical reasons for alignment, while the second option correctly highlights the strategic and beneficial incentives for countries to conform to Basel-inspired standards.

IFEPIA7022_001_2025_3 - Economics of Finance EOF Final - Dec 16, 2025

Countries around the world adopt bank regulation broadly consistent with the framework issued by the Basel Committee because

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IFEPIA7022_001_2025_3 - Economics of Finance EOF Final - Dec 16, 2025

Countries around the world adopt bank regulation broadly consistent with the framework issued by the Basel Committee because

View Explanation

Log in for full answers

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