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Simon Johnson: Our Financial System Just Took A Major Step Toward Becoming More Dangerous

Our Financial System Just Took A Major Step Toward Becoming More Dangerous
Maxwell Strachan
By 

Senior Reporter, HuffPost

WASHINGTON - JULY 17: In this handout image supplied by the International Monetary Fund (IMF). International Monetary Fund's Economic Counsellor and Director of the Research Department Simon Johnson (R) and Deputy Director Charles Collyns (L) hold a press briefing on the release of the IMF's World Economic Outlook at the IMF Headquarters July 17, 2008 in Washington, DC. The IMF raised its growth forecasts slightly but stated the chance for a global recession. (Photo by Stephen Jaffe/IMF via Getty Images)
WASHINGTON - JULY 17: In this handout image supplied by the International Monetary Fund (IMF). International Monetary Fund's Economic Counsellor and Director of the Research Department Simon Johnson (R) and Deputy Director Charles Collyns (L) hold a press briefing on the release of the IMF's World Economic Outlook at the IMF Headquarters July 17, 2008 in Washington, DC. The IMF raised its growth forecasts slightly but stated the chance for a global recession. (Photo by Stephen Jaffe/IMF via Getty Images)

The fundamental assumption of modern bank regulation is that nations need to coordinate, and they negotiate the relevant international standards in the Swiss city of Basel, home to the Bank for International Settlements, under whose auspices such negotiations are held. The United States has an important seat at the table, but so do the Europeans and others. These negotiations are shaped by three main forces: the United States, Britain and the euro zone, with Japan often siding with the euro zone. (It's one country, one vote, so this can easily go against the United States.)

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