Financial systems have outgrown the institutional arrangements traditionally used to govern them. Finance is no longer a neutral background mechanism, but a structural force embedded in macroeconomic outcomes, technological change, and social distribution. At the same time, authority over the financial system remains deliberately fragmented across mandates, sectors, and jurisdictions. Under these conditions, coherence cannot be preserved automatically.
Governing Financial Ecosystems addresses the question that follows once financial design is made explicit: how is coherence preserved over time in a system characterized by irreducible trade-offs, deep interdependence, and fragmented authority? The report reframes governance not as control, rule-setting, or institutional hierarchy, but as system stewardship under uncertainty.
What this report does
This volume establishes a conceptual foundation for understanding governance as a source of systemic resilience—or fragility—in its own right. In particular, it:
- Reframes governance as continuous stewardship, distinct from regulation and supervision
- Treats governance as an embedded structural layer of the financial ecosystem, interacting with information, infrastructure, innovation, and integration
- Identifies a limited set of core governance functions required to preserve system-wide coherence under fragmented authority
- Explains how governance failure emerges endogenously, often without rule failure or visible institutional breakdown
- Clarifies the limits of governance, including legitimacy constraints and dependence on inputs it does not fully control
Rather than prescribing institutional reforms, the report clarifies what governance must achieve once design trade-offs are acknowledged—and why failure to do so constitutes a form of systemic risk.
Position within the Financial Ecosystem Stewardship Series
Governing Financial Ecosystems is the second volume in the Financial Ecosystem Stewardship Series developed by Bank & Finance Consulting Group.
The series treats financial stability as a problem of stewardship under irreducible uncertainty, organized around a coherent sequence:
- Design — structuring the financial ecosystem and its trade-offs
- Governance — stewarding coherence under fragmented authority
- Diagnostics — making emerging fragility legible
- Stress Testing — exploring propagation under strain
- Institutionalization — preserving judgment and legitimacy over time
This governance volume begins where Designing Financial Ecosystems necessarily ends. Once architecture is defined and trade-offs are explicit, stewardship becomes unavoidable. Governance is the mechanism through which that stewardship is exercised continuously, before stress becomes visible.
Intended audience
This report is written for readers responsible for system-level outcomes, including:
- Central banks and financial supervisory authorities
- Finance ministries and macro-financial policymakers
- Multilateral development banks and international organizations
- Senior decision-makers concerned with financial coherence, legitimacy, and resilience
It assumes familiarity with financial stability concepts and focuses on institutional reasoning and coordination, rather than technical rule design.
Why this matters
Recent episodes of financial stress have shown that instability often arises not from regulatory absence or institutional weakness, but from coordination failures, governance drift, and misalignment across system layers that accumulate quietly over time. By treating governance failure as an endogenous source of systemic risk, this report shifts attention upstream—from crisis response to stewardship capacity.
Governing Financial Ecosystems establishes why governance cannot substitute for design, diagnostics, or stress testing—yet also why none of those functions can operate effectively without governance. In doing so, it sets the conceptual foundation for the next volume in the series: Diagnosing Financial Ecosystems.
Read the full report:
Governing Financial Ecosystems: An Institutional Architecture for Coordination, Resilience, and Systemic Stability
