International monetary and financial law : the global crisis / edited by Mario Giovanoli, Diego Devos.
2010
K1066 .I585 2010 (Map It)
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Title
International monetary and financial law : the global crisis / edited by Mario Giovanoli, Diego Devos.
Published
Oxford ; New York, N.Y. : Oxford University Press, 2010.
Call Number
K1066 .I585 2010
ISBN
9780199588411 (hbk. : alk. paper)
0199588414 (hbk. : alk. paper)
0199588414 (hbk. : alk. paper)
Description
li, 610 pages : illustrations ; 26 cm
System Control No.
(OCoLC)562777463
Summary
This text examines current legal issues of international monetary and financial law in the light of the current global financial crisis and consequent reforms of international and domestic financial architecture. It deals with post-crisis financial regulation and supervision.
Note
This text examines current legal issues of international monetary and financial law in the light of the current global financial crisis and consequent reforms of international and domestic financial architecture. It deals with post-crisis financial regulation and supervision.
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Added Author
Table of Contents
Table of Cases
xxv
Table of Legislation
xxxi
Table of International Conventions/Agreements/Regulations etc
xxxix
List of Contributors
xliii
I.
THE REFORM OF THE INTERNATIONAL FINANCIAL ARCHITECTURE
1.
The International Financial Architecture and its Reform after the Global Crisis
A.
Introduction: The Development of the International Financial Architecture and the Global Crisis of 2008/9
1
(1).
International Financial Architecture and International Financial Standards
2
(2).
The Global Financial Crisis of2008 and 2009
5
B.
The Initiatives for Reforming the IFA taken in 2008 and 2009
8
(1).
The Involvement of the G-20
10
(2).
The Washington Summit of November 2008
12
(3).
The London Summit of April 2009
15
(4).
The Pittsburgh Summit of September 2009
19
(5).
The UN Commission of Experts on Reforms of the International Monetary and Financial System
22
(6).
The Group of Thirty Report on Financial Reform
23
C.
General Structure of the Reformed IFA after the Global Crisis
(1).
Overview
24
(2).
The G-20
26
(3).
Position and Role of the IMF in the IFA
30
(4).
The FSB
34
(5).
The BCBS
44
(6).
The FATF and the Global Forum on Transparency and Exchange of Information
46
D.
International Financial Standards: Soft Law---Or Not So Soft?
48
(1).
Contents of IFSs
49
(2).
Implementation of IFSs
52
(3).
Legal Character of IFSs
57
E.
Conclusion: Reaching the Limits of S̀oft Law'?
59
Appendices
2.
Reforming the IMF
A.
Introduction
1
B.
Revising the Legal Framework for Surveillance
(1).
Background
6
(2).
The 2007 Decision
14
C.
Governance Reform
23
(1).
Quota Adjustments
28
(2).
Addressing the Needs of Low-Income Members
34
(3).
The Size and Composition of the Executive Board
44
D.
Reforming the Fund's Lending Instruments
46
(1).
The Existing Framework for Fund Financing
48
(2).
The Flexible Credit Line
50
E.
Developing a New Income Model
57
(1).
The Sale of Gold
64
(2).
Expansion of Investment Authority
67
(3).
Charging for Technical Assistance
70
F.
Conclusion
73
3.
Crisis Prevention: Lessons from Emerging Markets for Advanced Economies
B.
The Diagnosis: Underlying Causes of Crisis
15
(1).
Imbalances and Rigidities that Led to Financial Vulnerabilities
21
(2).
Weak, and Poorly Regulated, Financial Systems that Concentrated Risk
26
(3).
Weaknesses in Legal, Corporate Governance, and Accounting Frameworks
30
(4).
Information Asymmetries, Transparency, and Uncertainty
33
C.
Crisis Prevention: The International Response
36
(1).
Surveillance, Standard-setting, and Technical Assistance
37
(2).
Asset and Liability Management
48
(3).
Capital Market Development
53
(4).
IMF Facilities
60
(5).
Debt Restructuring
71
D.
Conclusions
88
4.
Standards and the Rule of Law after the Global Financial Crisis
B.
Ethics in Finance
10
C.
Certainty and CSR
19
D.
A Five-fold Classification
25
E.
Values Matter to Value
31
5.
The G-20 Emphasis on Promoting Integrity in Financial Markets
B.
Background on the Group of Twenty
6
C.
G-20 Leadership Meetings in 2008 and 2009
9
D.
Traditional Notion of Market Integrity---Anti-money Laundering and Counter-terrorist Financing
14
E.
Cooperation and Consequences for Non-cooperation
20
(1).
FATF's International Cooperadon Review Group
21
(2).
Cooperation with Respect to Prudential Standards
25
(3).
Tax Matters
34
(4).
Other Measures to Prevent Loss of Fiscal Resources
37
(5).
Bank Secrecy
39
F.
The Future
42
II.
FINANCIAL REGULATION AND SUPERVISION: THE CRISIS TEST
6.
The Proposals of the LarosieGre Group on the Future of Financial Supervision in the European Union
A.
The LarosieGre Report
(1).
The Content of the European Commissions Mandate to the Larosiere Group
1
(2).
Structure of the LarosieGre Report
3
B.
The Two Proposals of the LarosieGre Report on the Readjustment of the Supervisory Framework in the European Financial System
(1).
Introductory Remarks
4
(2).
The Short-term Proposal
6
(3).
The Long-term Proposal
22
C.
Establishing the European System of Financial Supervision (ESFS)
(1).
Overall Examination
25
(2).
Initiatives to Strengthen Supervision at the National Level
28
(3).
Initiatives to Strengthen the ̀Level 3' Committees
30
(4).
Initiatives in Relation to Other Aspects of Systemic Stability
35
D.
An Evaluation
39
7.
The Implementation of the LarosieGre Report: A Progress Report
A.
A Work in Progress
1
B.
Some Remarks on the Procedure
7
C.
The Concept of a European System of Financial Supervisors (ESFS)
8
D.
The Composition of the European Banking Authority (EBA)
12
E.
The Tasks and Powers of the EBA
13
F.
The Decision-making Powers
16
(1).
Technical Standards
17
(2).
Another Basis for the Regulatory Action of the EBA: Article 8
18
(3).
The Contribution of the EBA to the Consistent Application of Community Law
19
(4).
Emergency Action
20
(5).
The Settlement of Disagreements among Competent Authorities
21
(6).
The Mechanism for Safeguarding the Fiscal Autonomy of the Member States
23
(7).
Good Governance and the Decision-making Power
24
G.
Colleges of Supervisors, Delegation, and Building a Common Culture
(1).
Colleges of Supervisors
25
(2).
Delegation
26
(3).
Building a Common Culture
27
H.
Appeal System
28
I.
The European Systemic Risk Board (ESRB)
(1).
The Two Legal Acts and the Status of the Board
29
(2).
Mission, Objectives, and Tasks of the Board
31
(3).
The Organization of the Board
32
(4).
Warnings and Recommendations
35
J.
The Relations between the ESFS and the ESRB
36
K.
International Relations
39
L.
The Tasks of the ECB for the ESRB
40
M.
Accountability
41
N.
Some Words of Preliminary Conclusion
44
8.
The Basel Committee and EU Banking Regulation in the Aftermath of the Credit Crisis
A.
Financial Turmoil and Global Recession---The Economic Sequence of the Crisis until Year-end 2009
1
B.
Driving Factors and Possible Responses
(1).
Supervisory Style: Macro versus Micro Supervision
9
(2).
Structure of Supervision and Supervisory Authorities
11
(3).
Structure of the Finance Industry
16
(4).
Liquidity
17
(5).
Capital Adequacy
30
(6).
The Non-regulated Financial Sector
41
(7).
The Use of Risk Models
54
(8).
GAAP Valuation and Disclosure
58
(9).
Correlation Risks and Large Exposures
71
(10).
Underwriting Standards
73
9.
Striking Changes in US Banking Supervision and Regulation
B.
Institutions Too Big To Fail---Supervision
4
C.
Institutions Too Big To Fail---Supervisor in General
8
D.
Institutions Too Big To Fail---Oversight of Supervision
11
E.
Enhanced Supervision and Regulation
(1).
Financial Holding Companies Subject to Stricter Prudential Supervision
21
(2).
Office of Thrift Supervision
32
(3).
Bank Holding Companies
33
(4).
Lending Limits
35
F.
Enhanced Supervision---Non-bank Banks
36
G.
Institutions Too Big To Fail---End Bailouts
37
H.
International Issues
41
I.
Emergency Liquidity Facility
43
J.
Securitization
47
K.
Consumer Protection
49
L.
Investor Protection
57
M.
Derivatives
58
N.
Executive Compensation
64
O.
Insurance
67
P.
Federal Reserve Independence
69
Q.
Minorities and Women in the Federal Regulatory Agency Workforce
74
10.
Lessons for 21 st-Century Central Bankers: Differences between Investment and Depositary Banking
B.
US Financial Markets Legislation before 1999
(1).
The Banking Act of 1933 (̀Glass-Steagall')
4
(2).
Historical Antecedents to US Banks' Securities Powers
6
(3).
Depositary Banks' Connection to the Capital Markets: The Trust Business
9
(4).
The Creation of Federal Deposit Insurance
11
(5).
Pre-1999 Securities and Capital Market Legislation
13
C.
Distinguishing Between ̀Regulation' and S̀upervision and Examination'
16
D.
Which Process for Securities Firms?
22
E.
The Biggest Distinction Between Commercial Banks and Securities Firms: Herein of Culture
(1).
The Cultural Difference
25
(2).
A 1971 US Supreme Court Case Recognizing this Cultural Difference
28
(3).
Some Words from the United Kingdom
30
F.
Herein of the ̀Lender of Last Resort': Enter the Central Bank
34
G.
Conclusion
37
11.
The Reform of Financial Regulation in the United Kingdom after the Crisis
B.
Treasury Review
2
(1).
Council for Financial Stability
3
(2).
Financial Stability Objective for the FSA
5
(3).
Enhanced Powers for the FSA
8
(4).
Regulations Affecting Short-selling
9
(5).
Extending and Possible Pre-funding of the Financial Services Compensation Scheme
10
C.
The Turner Review
13
(1).
Increasing the Quantity and Quality of Bank Capital
16
(2).
Regulation by Substance not Form
24
(3).
Credit Rating Agencies
26
(4).
Remuneration
28
(5).
Credit Default Swaps
31
(6).
Macro-prudential Analysis and Intellectual Challenge
32
(7).
Supervisory Approach
35
(8).
Cross-border Banks
38
(9).
Risk Management and Governance
40
(10).
Regulation of Large Complex Banks
41
D.
The Banking Act 2009
42
(1).
Stabilization Options
44
(2).
Bank Insolvency Procedure
46
(3).
Bank Administration Procedure
47
E.
The Walker Review
50
(1).
Board Size, Composition, and Qualification
52
(2).
Functioning of the Board and Evaluation of Performance
53
(3).
The Role of Institutional Shareholders
54
(4).
Governance of Risk
55
(5).
Remuneration
56
F.
What Does the Future Hold?
59
12.
Regulation of Rating Agencies: Current and Future
B.
Background of Problems and Current Efforts
(1).
Background of Problems
2
(2).
Current Efforts
4
C.
Overview of Regulation in Japan
(1).
New Legislation
9
(2).
The Rating Market in Japan
13
(3).
Voluntary' Registration System
14
(4).
Foreign Entry Control
16
D.
Remaining Problems with the Current New Regulations
18
(1).
Civil Liability
19
(2).
Potential for New Entry
29
(3).
Public Use of Credit Ratings
32
(4).
State-run Rating Agency and Investor-owned Rating Agency
33
(5).
Regulation of Individual Analysts and Self-regulation
36
E.
Conclusion
39
13.
Sovereign Wealth Funds and their Regulation
B.
A Brief Overview of Sovereign Wealth Funds
5
C.
Regulations and Guidelines for SWFs
(1).
Why the Calls for Regulations and G uidelines?
15
(2).
SWF Transparency and Governance Rankings
17
(3).
Regulation of, and Guidelines for, SWFs
19
(4).
Domestic ̀Hard Law' Option
23
(5).
A Domestic S̀oft Law' Option
46
(6).
International S̀oft Law' Option
53
D.
SWF Responses to Calls for Regulation of SWFs
69
E.
Conclusion
72
III.
FINANCIAL CRISIS RESOLUTION AND LITIGATION ISSUES
14.
The Federal Reserve's Response to the Crisis: Doing Whatever it Takes Within its Legal Authority
B.
Monetary Policy Powers
6
C.
Using Prudential Supervisory Powers to Ensure the Health of the Banking System
11
D.
The Powers to Provide Liquidity to Markets and Institutions Needing Extraordinary Assistance
16
E.
Conclusion
56
15.
European Supervisors in the Credit Crisis: Issues of Competence and Competition
B.
Lender of Last Resort Assistance: A Sketch of the Field
(1).
Terms Used
2
(2).
Types of Emergency Liquidity Assistance (ELA)
3
(3).
Distinction between Liquidity and Solvency Support
4
C.
ESCB Objectives, Tasks, Functions, and Principles
5
D.
ESCB's Pre-crisis ELA Framework
(1).
The Eurosystem's Own Description of ELA Arrangements
9
(2).
Treaty Competences and Auto-limitation by the Eurosystem
10
E.
The European Commissions Competences
(1).
The End of Competition Policy?
17
(2).
Article 87 EC (Article 107 TFEU)
18
(3).
The Commission's Approach to LOLR being State Aid
19
(4).
From ELA to Bail-outs
23
F.
European Political Responses to the Crisis
(1).
Autumn Meetings and a Commission Communication
24
(2).
Ecofin, 7 October 2008
25
(3).
Eurozone States' Summit, 12 October 2008
26
(4).
The Commission's Communication, 13 October 2008
28
(5).
European Council, 15-16 October 2008
32
(6).
European Recovery Plan and National Measures
34
G.
ECB and Commission Scrutiny of National Measures
(1).
Legal Framework for ECB Opinions on National Measures
35
(2).
Main Thrust of the ECB Opinions
36
(3).
ECB Recommendations
37
(4).
Preventing Central Bank Support becoming Monetary Financing of the Government
38
(5).
Commissions Guidance
42
H.
Concluding Remarks
43
16.
Legislative Measures to Support Financial Market Stability: The German Example and its European Context
A.
Introductory Remarks
1
B.
The Financial Market Stabilization Act---Commission Influence on a First Rescue Package
9
(1).
Contents of the Financial Market Stabilization Fund Act
12
(2).
The Requirements Set by the European Commission and Their Influence on the Application of the Act
29
C.
The Act Amending the Financial Market Stabilization Act
40
(1).
Changes of the Acceleration Act in Order to Remove Infringements of Community Law Directives
41
(2).
The Rescue Takeover Act---A Non-applied Act Raising Issues of International as well as of Community Law
59
D.
The Act on the Further Development of Financial Market Stabilization
75
(1).
Contents of the Act on the Further Development of Financial Market Stabilization
77
(2).
Commission Influence
89
(3).
Application in Practice
96
E.
Conclusions
98
17.
Cross-border Bank Resolution: A Reform Agenda
B.
Bank Failure Resolution
(1).
Objectives
4
(2).
Special Resolution Tools for Banks 17.07
C.
Cross-border Legal Challenges
(1).
Measures Designed to Protect Local Interests and Stakeholders (̀Ring fencing')
9
(2).
Impediments to the Enforcement or Unwinding of Financial Contracts in a Cross-border Context
27
D.
Addressing the Challenges
34
(1).
A Supranational Solution
35
(2).
Cooperation, Coordination, and Convergence
39
E.
Conclusion
44
18.
The Rescue of UBS
B.
Switzerland and its Two ̀Big Babies'
4
C.
UBS in Turmoil
6
D.
The Rescue
10
(1).
Divestiture of Troubled Assets: The SNB Stabilization Fund
16
(2).
Maintaining Capital Ratios: The Capital Injection by the Swiss Government
27
(3).
Capital Requirements, Leverage Ratio, and Compensation Policy
33
(4).
The Rescue, 14 Months Later
35
E.
An Institutional Viewpoint
38
19.
How Crisis-Resistant is Islamic Finance?
B.
Intrinsic Stability of Islamic Finance
12
C.
Risks in Islamic Finance
23
D.
Types of Risk in Islamic Finance
25
E.
Credit Risk
26
F.
Market Risk
28
G.
Liquidity Risk
30
H.
Operational Risk
31
I.
Risks Which are Peculiar to Islamic Finance
32
(1).
Shan a Non-compliance Risk
33
(2).
Fiduciary Risk
36
(3).
Displaced Commercial Risk
37
(4).
Equity Investment Risk
40
(5).
Inventory Risk
41
J.
Risk Management in Islamic Banks (Sharing the Malaysian Experience)
42
K.
The Adoption of the Standards Issued by the IFSB
47
L.
Islamic Finance Moving Forward
50
20.
The Donegal Case and the African Legal Support Facility
B.
The Need and Rationale for an African Legal Support Facility {Donegal's Case)
9
C.
The Legal Status, Mandate, and Structure of African Legal Support Facility
15
D.
Conclusion
24
21.
The Enforcement of Sovereign Debt
B.
Applicable International Law Principles
8
(1).
Pacta Sunt Servanda
11
(2).
Contractual Defences Based on International Law
16
C.
Measures Available to a Creditor where a Sovereign Debtor Defaults
23
(1).
Cession
24
(2).
Inability to Pay and Restructuring of Debt
27
(3).
Claims for Specific Performance and/or Damages
30
D.
Attachment of Assets in Order to Enforce a Judgment
76
E.
Waiver of Immunity from Enforcement Measures
83
F.
Concluding Remarks
84
IV.
MONEY, CENTRAL BANKS, AND PAYMENT OBLIGATIONS
22.
The Objectives of Central Banks
B.
General Principles
7
C.
Examples
21
D.
Monetary Stability
56
(1).
Meaning of Monetary Stability
63
(2).
Conflicting Objectives of Monetary Polity
87
E.
Financial Stability
91
(1).
Meaning of Financial Stability
92
(2).
Relationship with Other Objectives
107
F.
Conclusion
113
23.
Neutrality of Money and Central Bank Independence
B.
Money is Constitutional
(1).
Money is Neutral and Functional
5
(2).
Money is a Constitutional Phenomenon
11
C.
Money and Public Power
(1).
The Invention of State and Money
17
(2).
State Interventionism in Money: From Metallic Money to Monetary Policy
19
(3).
The Myth of Monetary Sovereignty
31
D.
Central Bank Independence---A Way to Reconcile the State with Money
38
(1).
What Does it Mean to be Independent?
41
(2).
Transparency and New Forms of Legitimacy
50
(3).
Challenges for Central Bank Independence and the Current International Financial Crisis
58
(4).
A New International Monetary Standard
65
24.
In Search of Order in the World Monetary System: State Intervention After the Decline of the Lex Monetae
B.
Change of the Role of Currency
2
(1).
From Money to the Subject Matter of Trade
3
(2).
Blurring Meaning of ̀Payment'
8
(3).
Decline of the Role of Currency in Settlements
9
C.
Decline of State Control
11
(1).
Decline of the Lex Monetae
12
(2).
Difficulty of Knowing Derivatives Market
16
(3).
Unbundled Linkage to Payment
17
D.
In Search of Order out of Chaos: Can States do Anything?
18
(1).
Rethinking the Liberalization of Capital Transfers
21
(2).
Unused Power of IMF to Regulate Capital Movements
25
(3).
Prescriptions Without Regulating the Freedom of Capital Transfers
29
(4).
Reinforcement by SDR
31
E.
Conclusion
36
25.
An Institutional Theory of Money
B.
The Functions of Money
4
C.
An Institutional Theory of Money
17
D.
The Central Bank
24
E.
The Banking System and Scriptural Money
34
F.
The Impact of the Financial Crisis on the Institutional Theory of Money
38
G.
Conclusions
47
26.
Transfer of Funds: Investment Rules and their Relationship to Other International Agreements
B.
Recent BIT Jurisprudence
4
C.
Investment Treaties
5
D.
Multilateral Rules on the Freedom of Transfer
6
E.
The Relationship between BIT Rules and Multilateral Treaties
7
27.
Global and Cross-border Credit Transfers: The Role of Legislation in Addressing Legal Risk for Participants
A.
Overview
1
B.
Legal Risk in Payment Systems under BIS Reports
4
C.
Addressing Legal Risk in Credit Transfers by UCC Article 4A and EU Payment Services Directive
31
(1).
Scope
32
(2).
The Payment Order and its Acceptance or Rejection
37
(3).
Timely Cancellation and Automatic Withdrawal of an (Unexecuted) Payment Order
44
(4).
Senders Payment Obligation and its Excuse under ̀Money-back Guarantee' upon Non-completion of a Credit Transfer
48
(5).
Sender s Payment
50
(6).
Senders Liability
53
(7).
Fraudulent and Mistaken (Albeit Authorized) Payment Orders
66
(8).
Completion of Credit Transfer and Discharge of Underlying Debt
74
(9).
Liability for Consequential Losses by a Receiving Bank
82
(10).
Restitution upon Erroneous Completion of Credit Transfers
85
(11).
Law Applicable: Variations and Cross-border/International Setting
89
D.
Conclusion
92
28.
Indexation and Value Clauses
B.
Rationale for Indexation Clauses
3
C.
Gold Clauses
(1).
Background to Gold Clauses
7
(2).
Nature of Gold Clauses
9
(3).
Gold Clauses in the Modern Era
13
(4).
Reflections on Gold Clauses
14
D.
Currency Indexation
(1).
Background to Currency Indices
16
(2).
The Multiservice Decision
17
E.
Cost of Living Indexation
(1).
Background to Retail Price Index Clauses
23
(2).
General Indices
25
(3).
Specific Indices
26
E.
Escalation Clauses
28
G.
Indexation Clauses and Shari'a Law
(1).
Importance of Shari'a Issues
31
(2).
Indexation Clauses and the Shari'a
33
H.
Intrinsic Validity of Index Clauses
37
(1).
Applicable Law
38
(2).
Uncertainty
39
(3).
Disappearance of the Index
41
(4).
Indexation Clauses as Implied Terms
42
I.
Challenges to Index Clauses
46
(1).
The Principle of Nominalism
47
(2).
Legal Tender Legislation
50
(3).
Public Policy
54
(4).
Specific Legislation
56
(5).
International Conventions
59
(6).
Consumer Contracts
60
J.
Conclusions
62
Index
593