Global bank lobbyists are warning policymakers over the risks of increasingly fragmented financial regulation, and other disparate policy approaches.

The bank lobby group, the Institute of International Finance (IIF), is calling on G20 policymakers to “take decisive action to raise global growth, reduce unemployment, enhance the global regulatory framework, and bolster financial stability,” it said Monday. Absent that, the global economy may have trouble exiting the financial crisis and attaining sustainable growth, it cautions.

The group warns that a tendency toward increasingly fragmented financial regulation is a major obstacle to these objectives. The IIF says that, while it understands the instinct of national regulators to act in their own interests, “this fragmentation tendency is threatening to undo decades of cross-border co-operation”.

Tim Adams, managing director of the IIF, said in a statement, “this co-operation was of fundamental importance in driving global economic growth in the recent past. If we fail to preserve the spirit – and the fact – of international harmonization of financial regulation, we run the risk of inhibiting the global economic regeneration so desperately needed by people everywhere.”

The IIF says that the G20 should re-double its commitment to the Financial Stability Board (FSB), as the co-ordinating body overseeing both the development and implementation of international financial regulatory policies, and stresses that there’s a growing need for the FSB to be empowered to resist unilateral or protectionist regulatory measures.