Designing the new architecture of international financial system in era of great changes by globalization

Abstract

We present a broad agenda for meaningful banking regulation reform aiming the creation of evolutive competitive environment to maximize the effectiveness of international financial system through the introduction of fair competition process among the banks in free market capitalism. We assume that the international financial system may evolve or decline within the evolutive competitive environment depending on both the environmental regulation policies as well as the competition between the banks. We present the commonly known definition of competition and apply the conceptual collateral thinking to identify the source of competitive strengths of financial institutions in free market capitalism. We explore how the banks conduct a search for competitive strategies. We show that the root cause of crisis in finances is hidden in the very wrong regulation policies and ideas behind these policies, which failed to create the evolutive competitive environment for effective, profitable, responsible and sustainable bank operation within existing international financial system. We review a number of initiatives on meaningful banking regulation reform proposed by central bankers from the G20 nations. We propose to introduce the Random Tax and the Quantum Tax. We argue that the introduction of the Random Tax and the Quantum Tax may compensate for the negative effects commonly associated with the existing banking regulation limitations imposed on the international financial system. We believe that the Random Tax and the Quantum Tax will improve the evolutive competitive environment and make it possible for the management teams at financial institutions to search for and to execute the winning virtuous business strategies toward the effective, profitable, responsible and sustainable banks operation.