By shedding light on a bank’s condition and future prospects, some of that uncertainty should disappear. While it is important that key prudential standards be sufficiently robust and consistent among countries, certain variations in the details and applications of these standards can be useful. As with private markets, some level of competition among regulators can stimulate improvements and change.
I will grant that the United States may take regulatory competition to an extreme, but it also demonstrates, I believe, the advantages that derive from accommodating different views and permitting financial institutions alternative ways to do business.