"There have been major areas of regression over the past year. Macroeconomic coordination has been poor in dealing with the implications of the exit from accommodative monetary policies. The financial market turmoil in several emerging market countries following the Fed’s taper announcement is the obvious case in point. In this context, calls for greater central banks’ coordination have fallen on deaf ears and there are no clear signals that we will see more in the coming months.

Likewise, the momentum behind addressing global macroeconomic imbalances has lost most of its steam. This is also the case within the European Union where imbalances have been at heart of the Eurozone crisis. Indeed, in Europe, addressing imbalances is conceived not as a matter of international coordination but as an exercise of unilateral adjustment by deficit countries.

Furthermore, the failure to move on with IMF governance reform due to continued Congressional opposition further attests to the deteriorated climate of international economic cooperation. The newly created BRICs bank and contingency reserve arrangement hardly improve the picture. These outcomes reflect the resentment of emerging markets and injects elements of fragmentation in to the international financial architecture. However, at this stage, the jury is still out as to whether these new facilities will provide a healthy competition for the Bretton Woods institutions."

"Cooperation on financial regulation has performed better than macroeconomic cooperation over the past year. Although significant time has elapsed since the onset of the crisis, the ‘window of opportunity’ for reforming financial rules has not been closed as yet. This attests to widespread political willingness to continue to work on making the financial sector more resilient.

However, there have also been episodes that cast doubt on policymakers’ and regulators’ ability (and willingness) to keep the reform agenda on track. For instance, there have been rumours that regulators have begun bowing to mounting pressure from bankers for a retreat on previously set or announced rules (as happened with the Basel Committee on securitization rules and leverage ratio). This is not to suggest that more stringent rules are necessarily the most effective most of the time. However, the perception that regulators may heed bankers’ complaints does not bode well for their political legitimacy and independence, and consequently, for the effectiveness of their actions.

Furthermore, although several international and transnational bodies are involved in the reform of the global financial system, regulatory harmonization has often proved wanting over the past year. For instance, Asian regulators have complained about European rules on clearing houses and the adoption of the Volcker rule has raised several concerns outside the USA. It is thus an open question of whether (and to what extent) domestic financial regulatory measures can be made compatible with those in place in other jurisdictions."