Abstract Climate risk poses a significant threat to economic actors across the world. Given the (systemic) nature of this risk, governments stand ready to rescue or extend relief to distressed firms in various ways. As in the case of the COVID-19 pandemic, widespread government rescues or targeted interventions in firms deemed ‘too important to fail’ are a real possibility in the case of climate-change-related impacts. While such interventions may be ex-post efficient or rather politically driven, they do not prevent deadweight losses and may create moral hazard in the sense that firms, ex ante, do not identify and/or address the climate risks they face. This ultimately means that climate change adaptation – a policy goal whose importance increases as climate change remains unmitigated – will not reach socially optimal levels. A better strategy involves adaptation policies where the relevant framework guides, incentivizes and pushes firms to build resilience to climate risks. Stress testing coupled with proactive adaptation measures that respond to revealed vulnerabilities appears to be the best option among various risk management strategies. In cases where government relief remains inevitable, there is a further need to ensure that it is fair and efficient.

With the rapid pace of technological innovation, traditional methods of policy formation and legislating are becoming conspicuously anachronistic. The need for regulatory choices to be made to counter the deadening effect of regulatory lag is more important to developing markets and fostering growth than achieving one-off regulatory perfection. This article advances scholarship on innovation policy and the regulation of technological innovation in the European Union. It does so by considering what building an agile yet robust anticipatory governance regulatory culture involves. It systematically excavates a variety of tools and elements that are being put to use in inventive ways and argues that these need to be more cohesively and systemically integrated into jurisdictions’ regulatory toolbox. Approaches covered include strategic foresight, the critical embrace of iterative policy development and regulatory learning in the face of uncertainty, and the embrace of bottom-up approaches to co-creation of policy such as policy labs and the testing and regulatory learning through pilot regulation and experimentation. The growing use of regulatory sandboxes as an EU policy tool to boost innovation and navigate regulatory complexity, as seen in the EU AI Act, is also probed.

Abstract Derivatives contracts are essential for financial markets and are supported by market practice and regulation. And yet, courts in different jurisdictions are recurrently confronted with parties claiming their voidness or unenforceability. Although the legal doctrines in each case differ, including ‘capacity’, ‘illegality’, ‘mistake’, ‘causa’, and ‘object’, this paper suggests that their common denominator is the complicated relationship between law and financial ‘speculation’. Speculation is protected by regulation and respected by academic thinking. The consensus behind this support, however, results from a combination of ideas that is complex, socially controversial, and unstable. Courts are often called to arbitrate conflicts, but their role in the oversight of derivatives markets is secondary, and determining whether an individual transaction is ‘speculative’ is difficult, if not impossible. To shape the broader conflict into a constructive dialogue, courts and parties use different legal doctrines. Yet, this paper argues that not all choices are equally suitable. Using a comparative analysis of case law in the United Kingdom, Germany, Portugal, Italy and Spain, it identifies how different choices can cause discontinuities and instability, a restless status quo, or a doctrinal emergence that leads to a new equilibrium, while drawing some general conclusions about courts’ role in disputes over derivatives.

The Crisis Management and Deposit Insurance (CMDI) framework needs repair. Some elements may be hailed as essential (deposit insurance, transfers, creditor hierarchy). However, the reform of the ‘twilight zone’ framework, including early intervention measures (EIMs), resolution preparation and triggers, is obviously needed and its substance is hard to object to. This paper explains why, and how to go about it. EIMs overlap with supervisory measures, or are mired in legal uncertainty, and are therefore not used. Preparation for resolution is not openly acknowledged by the law. Resolution triggers make the system rigid and slow. Lack of coordination can leave entities in legal limbo. ‘Twilight’ measures sit badly with market abuse. The Commission’s CMDI reform proposal addresses most of these flaws. It eliminates overlaps and enhances consistency between EIMs and supervisory measures, acknowledges the need to prepare for resolution, and allows the triggering of resolution through a sensible combination of framed discretion, cooperation between supervisors and resolution authorities, and a Public Interest Assessment (PIA) that compares resolution and insolvency-based liquidation more fairly. These amendments do not sufficiently acknowledge the relevance of market forces and do not suffice for a functioning Banking Union, but they are certainly necessary for other reforms to yield their benefits.

The Single Resolution Mechanism (SRM), which has been in operation since 2016, is particularly complex. It is headed by a ‘specific’ agency, the Single Resolution Board (SRB), but national authorities as well as national legal frameworks continue to play a decisive role in its operation. The Meroni doctrine also sets limitations on the extent to which (discretionary) powers may be delegated to the SRB. For this reason, very complex mechanisms had to be devised to guarantee that the European Commission and the Council would be sufficiently involved. Also, the SRM only applies to Banking Union Member States (i.e., euro area Member States and states in close cooperation). The co-existence of the Internal Market/EU27 on the one hand and the Banking Union on the other is a further source of complexity, as is the fact that the SRM partially relies on international law (the Single Resolution Fund and perhaps the European Stability Mechanism in the future). In short, the complexities within the SRM are many, and this article sheds light on them by considering complexities of a procedural, institutional and legal nature. It concludes by demonstrating that complexity has increased over time, yet it is probably unavoidable at this stage of European integration. However, efforts could still be made to simplify the applicable legal framework.

The State aid regime has dominated crisis management in the EU financial sector ever since the Global Financial Crisis. Even with the BRRD/SRM resolution framework taking effect, most European banks in distress continue to receive public financial support subject only to the State aid regime. However, it is one of the declared aims of the CMDI reform proposals to (further) reduce the bank-sovereign nexus by making it easier for banks of all sizes to access industry-financed resolution and deposit insurance funds instead of obtaining financial support directly from State budgets. This paper explores how the CMDI framework and the State aid regime currently interact and how this would change pursuant to the CMDI reform proposals. It argues that these reform efforts will be unlikely to make much of a difference and that, following their implementation, failing institutions will continue to be channeled away from the BRRD/SRM resolution framework towards a State aid-based assessment and treatment.

On 19 March 2023, the Swiss authorities announced that UBS would acquire its failing competitor Credit Suisse in a state-facilitated merger to avoid its resolution. What is seen by some observers as a blunt violation of international standards warrants an objective and balanced assessment. This article provides such an assessment, contrasting the measures taken on 19 March 2023 with alternative courses of action contemplated by the Swiss authorities and evaluating their outcome in light of the international framework devised for resolving global systemically important banks—the Key Attributes of the Financial Stability Board. The assessment shows that the handling of Credit Suisse’s failure was far from a bailout like those seen during the global financial crisis of 2007-2008. While the Swiss authorities chose not to apply their legal powers to put Credit Suisse into resolution, many aspects of the resolution framework fulfilled their intended purpose. Nevertheless, the article points to three key lessons for the further development of global resolution frameworks: (1) avoiding the risks associated with creating yet bigger banks should become an explicit objective of resolution planning; (2) preserving strategic optionality in resolution planning will significantly enhance the chances of successfully deploying resolution actions; and (3) resolution planning as well as a credible public sector backstop must cater for the ample funding needs during and after the resolution of global systemically important banks.