A large multinational bank, GlobalCore Bank, operates through subsidiaries and branches in over 50 countries. Its parent company is chartered in Country x, a relatively small jurisdiction with limited regulatory capacity. GlobalCore engages in high-risk structured finance activities through subsidiaries in Countries Y and Z. Suppose a regulatory concem arises about the lack of consktent oversight.
Based on lessons from the BCCI collapse and principles from the Basel Committee’s international regulatory framework, which of the following responses would most directly address the core regulatory vulnerability presented by GlobalCore Bank?
GlobalCore Bank should be placed under the authority of a single, well-resourced home-country regulator in Country X with power to obtain full information on global activities, while host countries retain rights to limit operations if oversight is deemed insufficient
Country x should delegate oversight responsibility to a supranutional body such as the IMF to avoid confficts of interest and ensure impartial supervision.
Country Y and Z should independently enforce their domestic regulations and require GlobalCore’s subsidaries to report all structured finance activities locally, bypassing Country Xs oversight.
Country X should require GlobalCore to split into regionaly independent banks, each supervised by its host country. to eliminate the complexities of multinational supervition.
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