And yet, despite early cooperation that addressed the global liquidity shortfall, little substantial progress has been made in the area of international financial regulation. Given the trauma that the entire world economy has suffered, in part due to a lack of such regulation, one would think more headway would have been made by now. A closer look, however, reveals a litany of factors that has created conditions making coordination points incredibly difficult to locate and even trickier to maintain. 

The G-20 summit in London last April focused squarely on addressing sticky global credit markets still reeling from subprime fallout. Members responded by patching together a $1.1 trillion liquidity package that, among other things, tripled the resources of the International Monetary Fund (IMF). By the time of the Pittsburgh summit that September, the focus had shifted from stemming the crisis to preventing a sequel through coordinating national financial regulatory policies across the group's membership. So, since Pittsburgh, what have the major proposals been and what progress has been made toward reaching agreement? 

G-20 regulation proposals can basically be lumped into two categories: those that have support in principle but for which consensus on the specifics has yet to be reached, making joint implementation premature -- and those that have already been abandoned. 

Among those in the first category are proposals like setting rules for bank capital requirements and reaching consensus on a set of international accounting standards. The G-20 has pledged to agree on capital standards by the end of this year and has targeted the end of 2012 as the deadline for policy implementation. And the Pittsburgh communiqué stated that the group hopes to reach an accord on accounting standards by June of 2011. 

As for the already abandoned proposals, there was the plan to cap finance executives' pay, an idea championed by the French and Germans but strongly opposed by the U.S. and Britain. Ultimately, the group pledged its commitment to a vague standard whereby executive pay should be limited to a percentage of total net revenues, without any definition of what that percentage should be. 

Another came just last week, when the IMF recommended that the G-20 consider a plan to charge fees to banks based on risk-taking and profits, as a way to build a "rainy day fund" that would shift the burden of massive government interventions to the financial sector. While the Europeans and the U.S. tried to win support for this "bank tax" proposal,the Canadians took the lead in opposing it with Japan, Australia and Brazil in tow. 

So why the lack of regulation success despite the severity of the crisis and all this "summiting"? 

First, there are the related problems of disproportional blame and disproportional pain. States that either don't feel responsible for causing the crisis or did not experience significant pain from it simply do not feel the need to reform. This explains the recalcitrance toward the bank tax proposal shown by Canada, whose banking system did not need bailing out. 

Second, there is a numbers and diversity problem resulting from the G-20 having officially supplanted the G-8 as the world's legitimate economic coordinating forum. Building consensus among 20 states at different levels of economic development with a wide range of ideological perspectives is much more difficult than doing so among eight predominantly Western industrial states. As an illustration, the summit agenda of the BRICs has largely focused on voting reforms at the IMF and World Bank, while the Western powers want to talk about capital requirements and executive pay. 

Third, and probably most important, there is the problem of monitoring and enforcement. Even if states can agree on an issue like capital requirements, they have little reason to believe that all signatories will properly implement and maintain the policy. The G-20 currently has no mechanism to verify that policies have been implemented, or to punish cheaters. 

What's needed is an institution with a clear mandate for monitoring and enforcing any agreements reached by the G-20. But creating such an institution from scratch is unlikely given the current distribution of power. The last time major economic institutions were created, the United States had emerged from World War II as a global leader with unparalleled power. Washington led the world in building the Bretton Woods system and was largely able to impose its preferences on weaker powers when there were disagreements. Simply put, coordination is easier when the balance of power so dramatically favors one state. 

Today, conditions are obviously less favorable. While the U.S. remains the pre-eminent economic power, its relative dominance has diminished. And when it comes to the issue of financial regulation, America is sorely lacking in leadership credentials given its starring role in the current crisis. 

Yet, if the prospects for building a new regulatory architecture appear weak, the G-20 could consider widening the mandate of the IMF to include monitoring and enforcement of any regulatory agreements.

The fund has already rebounded over the past two years from near-irrelevance to play a central role in responding to the crisis, including as an important voice on the issue of regulation. Its monitoring capabilities are unparalleled. Lastly, it's available -- and would likely accept the job. 

Of course, a prerequisite will be for the fund to push through the long-awaited voting reforms that will give greater voice to the BRICs and other developing nations. Once this is accomplished, the newer, more-inclusive IMF will be all-the-more suited to take on this new role. 

It may not be the perfect option, but currently, it's the best one. 

**Daniel McDowell is a graduate student at the University of Virginia currently pursuing a Ph.D. in foreign affairs.