Finanzmarktregulierung in der Krise oder die Krise der Finanzmarktregulierung?

The regulation of finance is central to the growth and development of every economy. Financial regulation determines the overall character of the financial system, the relationship between borrowers and savers, the allocation of capital, and the macroeconomic performance of the economy. Financial market regulation is distinct from regulation of other sectors of the economy because of the essential infrastructural role of finance—all other sectors of advanced economies depend on the financial system. Despite its enormous importance, financial regulation normally has low political salience. Except in times of crisis, most voters—and therefore politicians—have relatively little interest in the matter. This can be attributed in part to the complex and technical nature of financial markets and regulation, which relatively few people understand well. Low political salience facilitates a regulatory process that is very heavily shaped by regulators (technocrats) and the industry they regulate, with only minor direction from elected political leaders. In the long history of capitalism, bank and financial system crises have been regular occurrences. Regulation, or regulatory failure, is often seen as a cause of crises, but regulatory change is also the response. Thus any given financial regulatory regime is never settled for long. After the Great Depression, advanced capitalist economies introduced highly restrictive financial regulatory regimes designed to minimize systemic risk from bank failures. In the postwar period, restrictive regulatory regimes were combined with capital controls that limited international movements of capital. The postwar Bretton Woods international monetary regime stabilized fixed exchange rates through such controls and, when necessary, lending by the International Monetary Fund (IMF) to countries that could not pay for their external debts. Starting with the collapse of the Bretton Woods regime in the early 1970s, all the advanced economies started liberalizing financial market regulation and removing capital controls as part of a broader shift toward a neoliberal economic philosophy. These deregulatory measures brought about a dramatic transformation of domestic financial systems and the reemergence of a dynamic and rapidly growing international financial market. Such dynamic and internationalized financial market was, in large part, the root cause of the early-21st-century financial crisis. The Great Financial Crisis of 2008 precipitated widespread review and revision of financial market regulations at both the domestic and international levels. These revisions include a shift from private self-regulation to state-driven regulation of financial markets, the centralization of regulation at the level of the European Union, and a closer cooperation between states in forging international regulatory standards. Nonetheless, despite the dramatic growth of the international financial market and transnational efforts to coordinate regulation, financial regulation remains overwhelmingly a domestic affair.

The global financial crisis that started in 2007 sparked several academic debates about the role that financial sector regulators played in the crisis and prompted policy reforms in the financial supervision architectures of several countries. This book focuses on the question of what accountability, independence, transparency and, more generally, governance mechanisms applicable to financial regulators can better contribute to building responsive, responsible and effective regulatory and supervisory frameworks that tackle the weaknesses of the pre-crisis regimes. It re-visits the concepts of accountability and independence of financial regulators as well as the main economic theories underlying financial services policy-making, in light of the crisis experience. In addition, it critically examines the post-crisis institutional frameworks of financial regulation and supervision in the EU, the US and Canada with a view to assessing whether the financial regulators of the post-global financial crisis era are well suited to effectively address the challenges and threats that global financial markets pose to the stability, integrity and good functioning of financial systems as well as to the protection of consumers, investors and society at large.Topics addressed in this volume include:- The theoretical foundations of accountability and independence in financial regulation after the crisis; - The influence of economic theory on the quality of financial regulation and supervision;- Accountability in the European Banking Union and the European System of Financial Supervision;- Post-crisis structures of financial regulation in the US and their impact on consumer/investor protection and financial stability;- The role of financial supervision architecture in the stability of the Canadian financial system. The contributors to this volume are economists, lawyers, political scientists and sociologists from both academia and practice. Therefore, this book will be highly relevant to scholars and practitioners in these areas.

The article covers key formats of interstate cooperation in the post-Soviet space. The authors conclude that the Eurasian Economic Union is the major integration project bringing together Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. This research addresses various legal issues related to founding of the EAEU single financial services market with provisions and annexes of the EAEU Treaty studied. The EAEU meets challenges and creates legal and institutional framework for single financial services market within a relatively short timeframe. By 2025 both Supranational Eurasian financial regulator should be established and EAEU legislation on financial services should be harmonized. These tasks require international and national regulation experience. Therefore through the use of comparative analysis some advantages of the European Union law in the field of financial services market regulation are pointed out alongside with particular national legislation aspects of the EAEU member states in the similar or relative fields. Comparative analysis provides for determination of modern approaches to financial services market regulation in the EAEU and its member states, and allows to emphasize advantages and disadvantages of such regulation. Comparative analysis is applied to specifically investigate three subject areas of high relevance for global financial community: institutional forms of trade in financial instruments; organized trade in financial derivatives; organization of algorithmic and high-frequency algorithmic trading. Conclusion drawn is that the EU experience in the matters of financial markets regulation is of particular interest for the EAEU and its member states.

The global financial crisis challenged the existing architecture for financial services regulation and supervision in the European Union (EU). This article first examines the new pieces of legislation that were issued by the EU in the wake of the crisis, as well as substantial revisions of existing EU legislation. Second, it conducts an overall assessment of the reforms implemented and highlights some open issues that were underscored by the crisis and that were only partially addressed afterward. It is argued that the framework for financial regulation and supervision in the EU after the crisis is still poorly equipped to deal with (or to prevent) future financial crises mainly because of the political constraints encountered during the reform process. One of the most important lessons to be drawn is that political factors are as important as (if not more important than) economic factors in shaping financial services regulation and supervision in the EU (and, arguably, elsewhere).

Financial Regulation and Supervision in Corporate Governance of Banks

At the latest the global financial crisis has raised the awareness of the need for a globally coordinated financial market regulation. Even though the necessity to cooperate is widely acknowledged, cooperation is often limited in practice. This article characterizes the formation of self-enforcing international financial regulation agreements. Our analysis allows to evaluate the desirability and feasibility of cooperative solutions and explains the challenges associated with the process of cooperation. We model the cooperation of national financial regulators in a game-theoretical framework that considers financial stability to be an impure public good. Joint national supervisory effort is supposed to increase aggregate welfare in terms of a more stable financial system both on a global and on a local level by simultaneously generating incentives to free-ride. Our analysis in general indicates the difficulty of reaching a fully cooperative solution. In our basic version of the model we show that partial cooperation of two or three countries is stable and improves the welfare of all countries relative to the non-cooperative Nash equilibrium. Further analyses highlight the role of additional club benefits. When signatory countries of a coalition gain benefits over and above the joint welfare maximization, stable coalitions of any size become feasible.

Improvements in financial regulation and supervision in the Central American region (CAPDR) have strengthened financial stability. Prudential instruments with potential macroeconomic effects have been introduced. Nonetheless, compared with the larger Latin American and selected industrial countries, there is still important scope for CAPDR to enhance financial supervision and regulation. Based on two surveys, and the analysis of the Basel Core Principles, the paper determines that some weaknesses exist in risk-based supervision, and that macroprudential measures have scarcely been deployed

This study explores how the financial market environment reshapes corporate social responsibility using a quasi-natural experiment provided by China's New Asset Management Regulation. Our research focuses on the adaptive strategies of non-financial firms in response to stringent financial market regulation, and we use a generalized DID model to identify the causal link between the NAMR and CSR. The findings reveal a decline in non-financial firms' CSR performance following the more stringent financial market regulation. Mechanism testing suggests that the negative impact is primarily due to the reduction in the return on financial asset investments. Furthermore, we assess the heterogeneity influences of financial regulation on the three dimensions of CSR (environment, society, and governance). Our analyses underline a significant decrease in the environment and governance CSR among non-financial firms, while no significant impact is observed on the social dimension of CSR. This study contributes to a greater understanding of the relationship between financial market regulation and CSR. It offers valuable insights for the development of effective policy guidance to ensure the optimal functioning of the real economy.

Financial market policies and regulation are inherently political issues, the implications of which run wider from markets themselves and their robustness or fragility, to encompass questions of political authority (technocrats or politicians?). Yet, in the long run-up to the financial crisis beginning in 2007, the governance of financial markets was accepted as being ‘beyond’ democratic direction. The first objective of this chapter is to explore aspects of de-democratisation, as it emerged historically in the UK and became a model for the EU. The second objective is to ask whether the crisis provided an opportunity to extend the perimeter of democracy to cover questions of the design of financial markets, or whether the converse occurred. A final objective is to think about the (potentially diverse) normative stances that might be taken within financial markets, and within international regulatory networks, vis-a-vis the prospect of democratic control. An important proviso is that it is not the purpose of the paper to argue for ‘more regulation’, or for ‘less’, indeed it is argued that the posing of regulatory questions in more or less terms obscures the more important underlying issue of ‘regulation by whom’.

SCOPE AND INTRODUCTION What forms of governance characterise financial market regulation? This chapter looks mostly at European, particularly Eurozone financial market regulation, with some comparative glances. Bank resolution, prudential regulation and market conduct regulation are discussed. The longest part of the text discusses the new Eurozone ‘mechanisms’ of banking union, with special attention to the European Stability Mechanism (ESM) and to the relationship between this and prudential and conduct regulation. The chapter aims to construct a perspective on the dynamics of governance between these three aspects of financial market regulation. The European Stability Mechanism (ESM) has a quite specific governance structure, differing from those of prudential and conduct regulation. The ESM is an intergovernmental mechanism outside (but articulated with) the legal framework of the European Union. The ESM was initially set up to offer conditional assistance to sovereign states, however it has been accorded an important role vis-a-vis banks. It is argued here that the ESM is becoming the ‘big brother’ of prudential regulation, with interesting political and legal consequences. For example, the ECB and its Single Supervisory Mechanism must have regard, when supervising banks and assessing their condition, to whatever view might be taken by the Governors of the ESM, who are finance ministers, regarding the availability and applicability of funding for restructuring or orderly winding up of certain banks. For the foreseeable future it is the ESM, not the EU's Single Resolution Mechanism (SRM), which has funds adequate for such purposes. The chapter starts with a discussion of market conduct regulation, looking first, in an empirical and comparative manner, at US state Attorney Generals, particularly in New York. Locally elected Attorney Generals provide a contrast with appointed market conduct regulators at national level in both the EU and US. The activism of appointees has been lower, historically. Some aspects of cross-jurisdictional conduct regulation by appointee-led agencies are briefly and critically discussed. Overall, the new architecture of financial market regulation – with its feet variously in EU and national administrative and criminal legislation, in ‘independent’ prudential bank regulation, and in intergovernmental decision making – amounts to a novel and complex governance design.

The article examines the role of transnational peer review in shaping financial market regulation in Australia in pursuit of financial stability. Transnational regulatory networks have become an important source of standards and enforcement practices in financial regulation. In the aftermath of the financial crises of the 2000s, global initiatives to strengthen financial supervision have reinforced peer review mechanisms to monitor the national implementation of transnational standards. Through such peer review, regulatory networks can influence domestic rules and practices, as well as the exercise of discretion by national regulatory authorities. The article studies the interaction between transnational peer review and regulatory choices in Australian financial supervision through three case studies. Notwithstanding concerns in the literature about the efficacy and legitimacy of regulatory networks, the case studies demonstrate the scope for productive dialogue between the transnational and national level in making regulatory choices.

The Impact of Financial (De-)Regulation on Current Account Balances

The Impact of Financial (De)Regulation on Current Account Balances

In testimony on April of 2012 before the House Financial Services Committee, U.S. Securities and Exchange Commission (SEC) Chairman, Mary Schapiro, stated that effective information sharing between financial market actors and their regulatory bodies is critical to fulfilling the regulatory obligations of the SEC. The 2008 financial crisis is recognized as a show case for the risks to the stability of the markets that ineffective information sharing among supervisory authorities represents. This paper constitutes a preliminary exploration of the challenges facing financial regulators building on prior research in the computing and information science community (CIS). Current literature as well as data from a recent study of financial market regulation is used to identify key actors in financial market regulation information sharing relationships and to begin to outline the challenges faced in this unique context and the resulting risk if those challenges go unaddressed. A recently developed theoretical framework for cross-boundary information sharing (Garcia et al 2007) is used to present insights about challenges and risks from the literature and the field.

The approaches to organization of state regulation system of the financial market are revealed, factors affecting the state regulation of the market by the state are considered, reasonably need to reform the system of state regulation of financial markets and an effective mechanism of its regulation are grounded. Three models of financial market regulation (sectoral, task-based and model of single supervision) are given based on the existing in economic literature approaches and solved their content. It is shown the mechanism of state regulation of the domestic financial market based on sectoral model. Its advantages and disadvantages are determined. The options for further reform of government regulation are proposed, including further development of existing regulators, introduction of two separate regulatory units, creation of separate megaregulator, creation of megaregulator on the basis of NBU. It is proved the possibility of introducing the megaregulator for financial market in Ukraine and trends of introduction of modern mechanisms of state regulation of the financial market in Ukraine based on international experience.