The Fed cut rates by half a percent today, and at this point, it must be running out of new ideas to try on the economy.  But it is worth underscoring how that rate cut happened.  It was coordinated with rate cuts by most of the central banks in the world's largest economies.

This sort of global solution could not have happened two decades ago, but in the past two decades, central banks have been coordinating their policy, especially their supervisory policy, through a completely informal institution called the Basle Committee for Banking Supervision.  Now the world's big banking supervisors impose the same capital adequacy standards on their big banks, and enforce those standards, in theory, in the same way.  They coordinate it through Basle and have often waxed about the value of face to face meetings.  I suspect the regulators would tell you that the regular interaction of Basle made the sort of cooperation marked by today's coordinated rate cuts possible.

I think institutions like Basle are paradigmatic responses to globalization, and the committee is one of the most effective examples of what people like Anne-Marie Slaughter call a regulatory network.  These networks aren't very open or transparent, but in a time when other international institutions like the international criminal court are accused of being ineffective, perhaps the mere fact that central banks network and coordinate - not just on questions of supervision, but, as today's rate cut makes clear, on questions of monetary policy - makes them real drivers of the internationalization of law.  Or law-like institutions, at least.  Anyway, I'll be presenting papers on this in New York, Dallas, and Minneapolis in the next month, it all builds on stuff I've written here and here.

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