The General Agreement on Trade in Services (GATS) has been the leading force of trade liberalization in services. This article attempts to decipher the implications of GATS in financial services. It explains the schedules of commitments made by Member States, and the way countries engage in commitments in financial services. These are critical in understanding how the GATS rules are applied by each Member, and whether GATS has been effective. The so-called 'prudential carve out' is analysed in detail with consideration to the general prudential regime of the financial system since it has implications for the stability and integrity of the financial system. The article concludes with some policy analysis on how prudential carve out might be better implemented.
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