International Banking Law ♦ Article 65 Va. J. Int’l L. 493 (2025)

Sovereignty and Legitimacy in International Banking Law

DAVID MURPHY & CHRISTINA PARAJON SKINNER

In the United States, as elsewhere around the globe, the prudential regulation of large banks is based on standards promulgated by the Basel Committee on Banking Supervision (BCBS or Basel Committee). In this transnational organization, bank regulators from leading jurisdictions come together to agree to highly detailed and prescriptive standards for large, internationally active banks. National implementations of the Basel rules and standards typically differ from the BCBS standard in only minor ways. The legitimacy of this rule-making process recently came under intense scrutiny when U.S. bank regulators proposed controversial regulations intended to complete the post-2008 rule-making package known as Basel 3 in July 2023. The substantive and procedural shortcomings with the proposed Basel 3 (so-called) “endgame” rule have shined a light on long-standing flaws with the legal and democratic legitimacy of the Basel regime.