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European Yearbook of International Economic Law 2010 pp 3–29Cite as

International Regulation and Supervision of Financial Markets After the Crisis

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Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 1))

Abstract

The title of this contribution could suggest that the financial crisis which hit the world first in summer 2007 and then with a second, even stronger strike in the second half of 2008, has already come to a halt. Sooner or later this will be the case; however, in early March 2009, when this essay was finalised, the USA and several European countries had just increased their rescue packages for financial markets and, in a parallel move, their aid programmes for the general economy.1 The full effects of this turmoil are still not foreseeable. Yet it has become clear that few economic events after World War II have touched public opinion and altered a broad set of economic factors as much as the financial crisis of 2007–2009 has.

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Notes

  1. 1.

    Cf. Financial Times, 21.01.2009: Geithner pledges “dramatic” action, http://www.ft.com/cms/s/0/6322d126-e7de-11dd-b2a5-0000779fd2ac.html; Handelsblatt, 22.01.2009, Staat will Bankbilanzen entgiften, http://www.handelsblatt.com/politik/deutschland/staat-will-bankbilanzen-entgiften;2131236; FAZ, 14.2.1009, Das größte Konjunkturprogramm in der Geschichte der Bundesrepublik, p. 1.

  2. 2.

    Financial Times Deutschland, 22.1.1009: Britische Banken vor Verstaatlichung, http://www.ftd.de/unternehmen/finanzdienstleister/:Finanzsystem-am-Abgrund-Britische-Banken-vor-Verstaatlichung/464091.html. With respect to Germany, see Gesetz zur weiteren Stabilisierung des Finanzmarktes, draft of 18 February 2009, http://www.bundesfinanzministerium.de/nn_82/DE/BMF__Startseite/Aktuelles/Aktuelle__Gesetze/Gesetzentwuerfe__Arbeitsfassungen/entw__Finanzmarktstabilisierungsergaenzungsgesetz__anl,templateId=raw,property=publicationFile.pdf.

  3. 3.

    See Reuters UK, 16 January 2009: US banks’ market capitalization shrinks, http://uk.reuters.com/article/marketsNewsUS/idUKN1548387620090116.

  4. 4.

    See ECB, Euro Area Bank Lending Survey, 6 February 2009, http://www.ecb.int/stats/pdf/blssurvey_200901.pdf?f440961f2e7d53f6ffc5d16c094e5f3c.

  5. 5.

    Handelsblatt, 16.2.2009: Derartiger Rückgang wäre bislang einmalig, http://www.handelsblatt.com/politik/konjunktur-nachrichten/derartiger-rueckgang-waere-bislang-einmalig;2157331.

  6. 6.

    See ECB, Monthly Bulletin, February 2009, p. 9; http://www.ecb.int/pub/pdf/mobu/mb200902en.pdf; Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Jahresgutachten 2008/09, p. 19 et seq.

  7. 7.

    Cf. Financial Times, 21.01.2009: Portugal suffers S&P rating cut, http://www.ft.com/cms/s/0/31884d0e-e7f1-11dd-b2a5-0000779fd2ac.html; Handelsblatt, 22.01.2009: Ökonomen warnen vor britischem Staatsbankrott, http://www.handelsblatt.com/politik/international/oekonomen-warnen-vor-britischem-staatsbankrott;2131304.

  8. 8.

    These countries are (at the end of February 2009) Hungary, Ukraine, Pakistan, Latvia, Belarus and Iceland, see http://www.imf.org/external/index.htm.

  9. 9.

    See Hannibalsson, The international financial crisis — The case of Iceland: Are there lessons to be learnt? Working Papers on Global Financial Markets, No. 3, 2008, http://www.gfinm.de/images/stories/workingpaper3.pdf.

  10. 10.

    The first coordinated measures took place on 18 September 2008; see the press release of the ECB at http://www.ecb.int/press/pr/date/2008/html/pr080918.en.html.

  11. 11.

    ECB, Financial Stability Review, December 2008, p. 12, http://www.ecb.int/pub/pdf/other/financialstabilityreview200812en.pdf. For a general overview see IMF, Financial Stability Report, October 2008, pp. 6–7; http://www.imf.org/external/pubs/ft/gfsr/2008/02/pdf/text.pdf.

  12. 12.

    In the Eurosystem, the priority of monetary stability is underlined by Article 105(1) TEC, which explains the more careful steps of the ECB in the recent months.

  13. 13.

    However, the regulatory state is not a new phenomenon in financial markets; see Arner, Financial Stability, Economic Growth, and the Role of Law, 2007, p. 95.

  14. 14.

    On the G20, see the general information available at http://www.g20.org/about_index.aspx.

  15. 15.

    G20, Declaration of the Summit on Financial Markets and the World Economy, 15 November 2008, http://ec.europa.eu/economy_finance/publications/publication13395_en.pdf.

  16. 16.

    On 4 February 2009, the IMF published its Lessons of the Financial Crisis for Future Regulation of Financial Institutions and Markets and for Liquidity Management, http://www.imf.org/external/np/pp/eng/2009/020409.pdf.

  17. 17.

    In this respect, see for example the divergent economic proposals in: Eichengreen/Baldwin, What G20 leaders must do to stabilise our economy and fix the financial system, 2008, www.voxeu.org. From a political point of view, see McCreevy, Address at the EP Committee on Economic and Monetary Affairs, Speech 09/34 of 3 February 2009, p. 3, http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/09/34&format=HTML&aged=0&language=EN&guiLanguage=en. Technical questions of adequate capital requirements are dealt with by Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 4 et seq., http://www.bis.org/review/r080922b.pdf.

  18. 18.

    There are pre-eminent exemptions; among them see Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006; Arner, Financial Stability, Economic Growth, and the Role of Law, 2007; Grote/Marauhn, The Regulation of International Financial Markets, 2006; Lastra, Legal Foundations of Monetary Stability, 2006; Scott, International Finance; Law and Regulation, (2nd ed.) 2008; Walker, International Banking Regulation, Law, Policy and Practice, 2001.

  19. 19.

    Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 1 (2) http://www.bis.org/review/r080922b.pdf; Franke/Krahnen, The Future of Securitization, 2008, p. 3, http://www.wiwi.uni-frankfurt.de/schwerpunkte/finance/wp/1706.pdf; Horn, Das Finanzmarktstabilisierungsgesetz und das Risikomanagement zur globalen Finanzkrise, BKR (2008), p. 452 (pp. 456–457); Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Jahresgutachten 2007/08, p. 93 (99).

  20. 20.

    Messerschmidt, Developments in Banking Law: 2006–2007, The subprime mortgage crisis, Rev. Banking & Fin. L. 27 (2008), p. 1 (4).

  21. 21.

    Messerschmidt, Developments in Banking Law: 2006–2007, The subprime mortgage crisis, Rev. Banking & Fin. L. 27 (2008), p. 1 (5).

  22. 22.

    By 2006, originations of subprime mortgages rose to 600 billion US dollars, up from 160 billion US dollars in 2001; see Messerschmidt, Developments in Banking Law: 2006–2007, The subprime mortgage crisis, Rev. Banking & Fin. L. 27 (2008), p. 1 (5). See also Horn, Das Finanzmarktstabilisierungsgesetz und das Risikomanagement zur globalen Finanzkrise, BKR 2008, p. 452 (457).

  23. 23.

    See Benjamin, Financial Law, 2007, p. 401 et seq.; Firla-Cuchra, Structured Finance, in: Freixas/Hartmann/Mayer (eds.), Handbook of European Financial Markets and Institutions, 2008, p. 597 et seq.; Wood, Law and Practice of International Finance, University Edition, 2008, p. 450 et seq.

  24. 24.

    Cf. Messerschmidt, Developments in Banking Law: 2006–2007, The subprime mortgage crisis, Rev. Banking & Fin. L. 27 (2008), p. 1 (3–4). Many regulatory responses aim at this weak point, see for example McIlroy, Regulating risks: A measured response to the banking crisis, Journal of Banking Regulation 9 (2008), p. 284 (286–288).

  25. 25.

    Bartsch, Die Geister, die ich rief…, NJW 61 (2008), p. 3337 et seq.; Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Jahresgutachten 2007/08, p. 93. On the economic rationales of securitisation, see Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, p. 10 et seq., http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  26. 26.

    Messerschmidt, Developments in Banking Law: 2006–2007, The subprime mortgage crisis, Rev. Banking & Fin. L. 27 (2008), p. 1 (4).

  27. 27.

    Cf. Wood, Law and Practice of International Finance, University Edition, 2008, pp. 453–454.

  28. 28.

    Cf. Wood, Law and Practice of International Finance, University Edition, 2008, p. 461. With respect to specific examples, see Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, p. 23 et seq., http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  29. 29.

    Franke/Krahnen, The Future of Securitization, 2008, p. 39, http://www.wiwi.uni-frankfurt.de/schwerpunkte/finance/wp/1706.pdf.

  30. 30.

    Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Jahresgutachten 2008/09, p. 120.

  31. 31.

    Cf. Wood, Law and Practice of International Finance, University Edition, 2008, pp. 465–466.

  32. 32.

    On this concept see Franke/Krahnen, The Future of Securitization, 2008, p. 9 et seq., http://www.wiwi.uni-frankfurt.de/schwerpunkte/finance/wp/1706.pdf; Walker, Editorial: The deconstruction of financial risk, Journal of Banking Regulation 9 (2007), p. 1.

  33. 33.

    For a deeper analysis see Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, p. 78 et seq., http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  34. 34.

    Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Jahresgutachten 2008/09, p. 121.

  35. 35.

    Hartmann/Valla, The Euro Money Markets, in: Freixas/Hartmann/Mayer (eds.), Handbook of European Financial Markets and Institutions, 2008, p. 453 et seq..

  36. 36.

    Hartmann/Valla, The Euro Money Markets, in: Freixas/Hartmann/Mayer (eds.), Handbook of European Financial Markets and Institutions, 2008, p. 453 (457).

  37. 37.

    Accordingly, Lehman Brothers Holding Inc. filed for bankruptcy protection in the USA under Chapter 11 Bankruptcy Code on 15 September 2008.

  38. 38.

    Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Jahresgutachten 2008/09, pp. 122–123.

  39. 39.

    On moral hazard see Lastra, Legal Foundations of International Monetary Stability, 2006, p. 113.

  40. 40.

    ECB, Financial Stability Review, December 2008, p. 12, http://www.ecb.int/pub/pdf/other/financialstabilityreview200812en.pdf.

  41. 41.

    See also Arner, Financial Stability, Economic Growth and the Role of Law, 2007, pp. 63–64.

  42. 42.

    Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 5, http://www.bis.org/review/r080922b.pdf.

  43. 43.

    Arner, Financial Stability, Economic Growth and the Role of Law, 2007, p. 64; Padoa-Schioppa, Regulating Finance, 2004, pp. 10–11.

  44. 44.

    Art. VI Sec. 3 IMF Agreement. For further reading, see Lowenfeld, International Economic Law, (2nd ed.) 2008, p. 608; Qureshi/Ziegler, International Economic Law, 2007, pp. 182–183.

  45. 45.

    For a current version of the code, see http://www.oecd.org/dataoecd/10/62/39664826.pdf.

  46. 46.

    The far-reaching effects have been cut down by the ECJ as far as capital movements are linked with the free movement of services or the right of establishment; see ECJ, C-452/04, Fidium Finanz AG, [2006] ECR I, 9521, paras. 25 and 47; C-524/04, Test Claimants in the Thin Cap Group Litigation, [2007] ECR I, 2107, paras. 101 and 104. Also C-102/05, A and B, [2007] ECR I, 871 para. 27.

  47. 47.

    Article 3(1) US Model BIT (2004); see also Dolzer/Schreuer, Principles of International Investment Law, 2008, pp. 80 et seq.

  48. 48.

    Cf. Arner, Financial Stability, Economic Growth, and the Role of Law, 2007, p. 37; Busch, Banking Regulation and Globalization, 2009, p. 246.

  49. 49.

    With respect to the Fed, see the historical development of federal funds rates at http://www.federalreserve.gov/fomc/fundsrate.htm.

  50. 50.

    For a statistical overview of the ECB rates from 1999 to 2008, see http://www.ecb.int/stats/monetary/rates/html/index.en.html.

  51. 51.

    Cf. Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 6, http://www.bis.org/review/r080922b.pdf; Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, paras. 43–45. See also Busch, Banking Regulation and Globalization, 2009, p. 251.

  52. 52.

    See in this respect Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 5 et seq., http://www.bis.org/review/r080922b.pdf. The long-term mutual reinforcement of both objectives is stressed by Issing, Monetary and financial stability — is there a trade-off? BIS Review 16/2003, p. 2; http://www.bis.org/review/r030331f.pdf. See also Padoa-Schioppa, Regulating Finance, 2004, p. 112 et seq.

  53. 53.

    For the ECB, see http://www.ecb.int/mopo/html/index.en.html; from a legal point of view, Häde, in: Calliess/Ruffert (eds.), EUV/EGV, (3rd ed.) 2007, Art. 105 para. 3; Ohler, Die hoheitlichen Grundlagen der Geldordnung, JZ (2008), p. 317 (322).

  54. 54.

    See Article 105(1) TEC. On this aspect, see Padoa-Schioppa, Regulating Finance, 2004, p. 115.

  55. 55.

    Cf. Issing, Monetary and financial stability — is there a trade-off? BIS Review 16/2003, p. 5; http://www.bis.org/review/r030331f.pdf.

  56. 56.

    Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 6, http://www.bis.org/review/r080922b.pdf.

  57. 57.

    Cf. Issing, Monetary and financial stability — is there a trade-off? BIS Review 16/2003, p. 5; http://www.bis.org/review/r030331f.pdf.

  58. 58.

    Cf. Padoa-Schioppa, Regulating Finance, 2004, p. 115.

  59. 59.

    For a comparison between IASB and FASB, see Fleckner, FASB and IASB: Dependence despite Independence, Virginia Law & Business Review 3 (2008), p. 275 et seq.

  60. 60.

    See Memorandum of Understanding between IASB and FASB of 27 February 2006, http://www.iasb.org/NR/rdonlyres/874B63FB-56DB-4B78-B7AF-49BBA18C98D9/0/MoU.pdf.

  61. 61.

    Regulation (EC) No 1606/2002, OJ 2002 L 243, p. 1. A codified set of IAS and IFRS incorporated under this regulation is provided by Commission Regulation (EC) No 1126/2008 of 3 November 2008, OJ 2008 L 320, p. 1.

  62. 62.

    Article 3 of Regulation (EC) No 1606/2002.

  63. 63.

    IMF, Global Financial Stability Report, October 2008, p. 113 et seq., http://www.imf.org/external/pubs/ft/gfsr/2008/02/pdf/text.pdf; Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, p. 6, http://www.coll.mpg.de/pdf_dat/2008_43online.pdf; Zeitler, Internationalisierung des Rechts — Notenbanken, Finanzstabilität und Rechnungslegung, in: Vielfalt und Einheit, Wirtschaftliche und rechtliche Rahmenbedingungen von Standardbildung, Schriften des Augsburg Center for Global Economic Law 19 (2008), p. 65 (78).

  64. 64.

    G20, Declaration of the Summit on Financial Markets and the World Economy, 15 November 2008, para. 16: Strengthening Transparency and Accountability, http://ec.europa.eu/economy_finance/publications/publication13395_en.pdf.

  65. 65.

    Commission Regulation (EC) No 1004/2008 of 15 October 2008, OJ 2008 L 275, p. 37.

  66. 66.

    Zeitler, Internationalisierung des Rechts — Notenbanken, Finanzstabilität und Rechnungslegung, Vielfalt und Einheit, Wirtschaftliche und rechtliche Rahmenbedingungen von Standardbildung, Schriften des Augsburg Center for Global Economic Law, 19 (2008), p. 65 (79).

  67. 67.

    See Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 5, http://www.bis.org/review/r080922b.pdf.

  68. 68.

    See the Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, paras. 25 et seq.

  69. 69.

    Padoa-Schioppa, Regulating Finance, 2004, p. 1 (99).

  70. 70.

    Draghi, How to Restore Financial Stability, Bundesbank Lecture 2008, BIS Review 112/2008, p. 3, http://www.bis.org/review/r080922b.pdf.

  71. 71.

    Padoa-Schioppa, Regulating Finance, 2004, p. 110; see also Arner, Financial Stability, Economic Growth, and the Role of Law, 2007, pp. 40 et seq.

  72. 72.

    The public relevance of payment systems is underlined by Article 105(2), fourth indent TEC.

  73. 73.

    Arrigunaga, Deposit Insurance Schemes: Reconciling Market Discipline with Financial Stability, in: Giovanoli (ed.), International Monetary Law, 2000, p. 323 (330–331).

  74. 74.

    G20, Declaration of the Summit on Financial Markets and the World Economy, 15 November 2008, para. 16: Strengthening Transparency and Accountability, para. 2, 6, http://ec.europa.eu/economy_finance/publications/publication13395_en.pdf.

  75. 75.

    On the FSF see Arner, Financial Stability, Economic Growth and the Role of Law, 2007, pp. 75–76; Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006, pp. 74–75.

  76. 76.

    See the text of the Act under http://www.opsi.gov.uk/acts/acts2009/pdf/ukpga_20090001_en.pdf. On the need for a special resolution regime, see Lastra, Northern Rock, UK bank insolvency and cross-border bank insolvency, Journal of Banking Regulation 9 (2008), p. 165 (169 et seq.).

  77. 77.

    Bundesgesetzblatt I, 2008, p. 1982. See also Horn, Das Finanzmarktstabilisierungsgesetz und das Risikomanagement zur globalen Finanzkrise, BKR (2008), pp. 452 et seq.

  78. 78.

    ECB, Financial Stability Review, December 2008, p. 9, http://www.ecb.int/pub/pdf/other/financialstabilityreview200812en.pdf.

  79. 79.

    Issing, Monetary and financial stability — is there a trade-off? BIS Review 16/2003, p. 1; http://www.bis.org/review/r030331f.pdf.

  80. 80.

    Padoa-Schioppa, Regulating Finance, 2004, p. 110.

  81. 81.

    See http://www.bundesbank.de/finanzsystemstabilitaet/fs.en.php.

  82. 82.

    See http://www.boj.or.jp/en/type/exp/seisaku/expfinsys.htm.

  83. 83.

    Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006, p. 23 et seq.; Arner, Financial Stability, Economic Growth and the Role of Law, 2007, p. 72; Lastra, Legal Foundations of International Monetary Stability, 2006, p. 138 et seq.

  84. 84.

    See Lastra, Legal Foundations of International Monetary Stability, 2006, pp. 138–139; Scott, International Finance; Law and Regulation, (2nd ed.) 2008, pp. 130–131.

  85. 85.

    A key element is the interbank market; see Padoa-Schioppa, Regulating Finance, 2004, p. 107; Lastra, Legal Foundations of International Monetary Stability, 2006, pp. 142–143; Scott, International Finance; Law and Regulation, (2nd ed.) 2008, pp. 130–131.

  86. 86.

    Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006, p. 24; Padoa-Schioppa, Regulating Finance, 2004, p. 99.

  87. 87.

    See for example Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006, p. 24; Hartmann/Valla, The Euro Money Markets, in: Freixas/Hartmann/Mayer (eds.), Handbook of European Financial Markets and Institutions, 2008, p. 453 (480–481).

  88. 88.

    Identical analysis by Lastra, Legal Foundations of International Monetary Stability, 2006, p. 139.

  89. 89.

    This is for example done by Ferguson, Should Financial Stability be an Explicit Central Bank Objective, p. 2; http://www.bis.org/events/conf0303/panferg.pdf. Similar approaches by Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006, p. 24; Scott, International Finance; Law and Regulation, (2nd ed.) 2008, pp. 132–133.

  90. 90.

    Cf. Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, p. 60, http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  91. 91.

    See for example Cartwright, Banks, Consumers and Regulation, 2004, p. 33; Crawford Lichtenstein, The Fed’s New Model of Supervision for “Large Complex Banking Organizations”, Transnational Lawyer 18 (2004–2005), pp. 283 et seq.; Johnston et al., Large and Complex Financial Institutions, Challenges and Policy Responses – Lessons from Sweden, IMF Working Papers, 2003; http://www.imf.org/external/pubs/ft/pdp/2003/pdp01.pdf.

  92. 92.

    See http://g8live.org/2008/10/12/g7-announces-plan-of-action-for-finance-crisis/.

  93. 93.

    Cf. Scott, International Finance; Law and Regulation, (2nd ed.) 2008, pp. 131–132.

  94. 94.

    Lastra, Northern Rock, UK bank insolvency and cross-border bank insolvency, Journal of Banking Regulation 9 (2008), p. 165 (172); Wood, Law and Practice of International Finance, University Edition, 2008, p. 342; see also Bank of England, Financial Stability Review, December 2003, p. 92, http://www.bankofengland.co.uk/publications/fsr/2003/fsr15art3.pdf.

  95. 95.

    Cartwright, Banks, Consumers and Regulation, 2004, p. 33.

  96. 96.

    On the relevance of liquidation proceedings in a market economy, see Lastra, Northern Rock, UK bank insolvency and cross-border bank insolvency, Journal of Banking Regulation 9 (2008), p. 165 (173); Padoa-Schioppa, Regulating Finance, 2004, p. 99.

  97. 97.

    For a comparable solution, see also Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, para. 127: “constructive ambiguity”.

  98. 98.

    Cf. Alexander/Dhumale/Eatwell, Global Governance of Financial Systems, 2006, p. 24; Lastra, Legal Foundations of International Monetary Stability, 2006, pp. 143–145; Padoa-Schioppa, Regulating Finance, 2004, p. 108.

  99. 99.

    See BIS, Committee on Payment and Settlement Systems, Core Principles for Systemically Important Payment Systems, Section 3.01, http://www.bis.org/publ/cpss43.pdf?noframes=1.

  100. 100.

    Core Principles for Systemically Important Payment Systems, Section 3.11 et seq.

  101. 101.

    Cf. Cartwright, Banks, Consumers and Regulation, 2004, pp. 31–32; Wood, Law and Practice of International Finance, University Edition, 2008, p. 342.

  102. 102.

    Expressly mentioned by recitals 5, 46 and 57 of Directive 2006/48 relating to the taking up and pursuit of the business of credit institutions, OJ 2006 L 177 p. 1; see also Follak, International Harmonization of Regulatory and Supervisory Frameworks, in: Giovanoli (ed.), International Monetary Law, 2000, p. 291 (309); Padoa-Schioppa, Regulating Finance, 2004, p. 97; Wood, Law and Practice of International Finance, University Edition, 2008, p. 342.

  103. 103.

    See for example Cartwright, Banks, Consumers and Regulation, 2004, p. 6.

  104. 104.

    Arrigunaga, Deposit Insurance Schemes: Reconciling Market Discipline with Financial Stability, in: Giovanoli (ed.), International Monetary Law, 2000, p. 323 (329–330).

  105. 105.

    See Arrigunaga, Deposit Insurance Schemes: Reconciling Market Discipline with Financial Stability, in: Giovanoli (ed.), International Monetary Law, 2000, p. 323 (329); Cartwright, Banks, Consumers and Regulation, 2004, p. 192.

  106. 106.

    Art. 7(1) Directive 94/19/EC on deposit guarantee schemes, OJ 1994 L 135, p. 5.

  107. 107.

    For this reason, the EU Commission has proposed to raise the amount to 50,000 Euro, see COM(2008)661 final.

  108. 108.

    Arrigunaga, Deposit Insurance Schemes: Reconciling Market Discipline with Financial Stability, in: Giovanoli (ed.), International Monetary Law, 2000, p. 323 (pp. 331–332).

  109. 109.

    See Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, paras. 134 et seq., which suggest a pre-funding mechanism.

  110. 110.

    See Hecker, Marktoptimierende Wirtschaftsaufsicht, 2007, pp. 31 et seq.

  111. 111.

    See Lastra, Legal Foundations of International Monetary Stability, 2006, pp. 151 et seq.

  112. 112.

    Cf for example Cartwright, Banks, Consumers and Regulation, 2004, p. 45 et seq.; Mayer, Regulatory Principles and the Financial Markets Services Act 2000, in: Ferran/Goodhart (eds.), Regulating Financial Services in the 21st Century, 2001, p. 25 (pp. 31–32).

  113. 113.

    Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, p. 2 (para. 4), http://www.bis.org/publ/bcbs128.pdf?noframes=1; see also McDonough, Speech at a conference on “The Challenge of Credit Risk” in Frankfurt am Main on 24/11/98, BIS Review 102/1998, p. 1.

  114. 114.

    Recital 5 of Directive 2006/48 relating to the taking up and pursuit of the business of credit institutions, OJ 2006 L 177 p. 1. For a general overview, see Schnyder, Europäisches Banken- und Versicherungsrecht, 2005, pp. 1 et seq.

  115. 115.

    Article 105(5) EC-Treaty.

  116. 116.

    See Lastra, Legal Foundations of International Monetary Stability, 2006, pp. 305–306; critical about this approach, Smaghi, Who Takes Care of Financial Stability in Europe, in: Goodhart, Which Lender of Last Resort for Europe? 2000, p. 227 (pp. 240–241); Smits, The Role of the ESCB in Banking Supervision, in: ECB (ed.), Legal Aspects of the European System of Central Banks, 2005, p. 199 (205) allocates this function to the ECB exclusively.

  117. 117.

    Cf. Häde, in: Calliess/Ruffert (eds.), EUV/EGV, (3rd ed.) 2007, Article 101, para. 1–5.

  118. 118.

    ECB, Convergence Report, May 2008, p. 23.

  119. 119.

    ECB, Convergence Report, May 2008, p. 24.

  120. 120.

    See, e.g. Arhold, Globale Finanzkrise und europäisches Beihilfenrecht, EuZW (2008), pp. 713 et seq.

  121. 121.

    See http://www.bis.org/publ/bcbs128.htm.

  122. 122.

    See Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, pp. 144 et seq. (paras. 644–683), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  123. 123.

    Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, pp. 144 et seq. (paras. 644–683), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  124. 124.

    Basel II favours the so-called Internal Ratings Based Approach, see Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, p. 52 et seq. (paras. 211–537), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  125. 125.

    Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, p. 204 et seq. (paras. 719–807), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  126. 126.

    Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, p. 226 et seq. (paras. 808–826), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  127. 127.

    Directive 2006/48 relating to the taking up and pursuit of the business of credit institutions, OJ 2006 L 177 p. 1.

  128. 128.

    Article 157 of Directive 2006/48.

  129. 129.

    See the information available at http://www.federalreserve.gov/generalinfo/basel2/default.htm.

  130. 130.

    Horn, Das Finanzmarktstabilisierungsgesetz und das Risikomanagement zur globalen Finanzkrise, BKR (2008), p. 452 (456); Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, para. 53.

  131. 131.

    See Ohler, Europäisches Bankenaufsichtsrecht, Derleder/Knops/Bamberger (eds.), Handbuch zum deutschen und europäischen Bankrecht, (2nd ed.) 2009, § 76, para. 44.

  132. 132.

    See http://www.bis.org/publ/bcbs144.pdf?noframes=1.

  133. 133.

    Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, para. 83.

  134. 134.

    Cf. Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, pp. 56 et seq., http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  135. 135.

    See Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, paras. 4 and 49 (xvi), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  136. 136.

    Cf. Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, para. 61. See also the sharp criticism by Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, pp. 51–52, p. 55, http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  137. 137.

    For an overview, see Marcelo/Rodriguez/Rocharte, Stress tests and their contribution to financial stability, Journal of Banking Regulation 9 (2008), pp. 65 et seq.

  138. 138.

    Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, June 2006, p. 2 (para. 5), http://www.bis.org/publ/bcbs128.pdf?noframes=1.

  139. 139.

    This is a suggestion coming from many sides; see for example McIlroy, Regulating risks: A measured response to the banking crisis, Journal of Banking Regulation 9 (2008), p. 284 (p. 286, pp. 290–291); Report of the High Level Group on Financial Supervision in the EU (de Larosière Group), 25 February 2009, para. 59. On the deficient equity capital of banks, see also Hellwig, Systemic Risk in the Financial Sector. An Analysis of the Subprime-Mortgage Financial Crisis, 2008, p. 43 et seq., http://www.coll.mpg.de/pdf_dat/2008_43online.pdf.

  140. 140.

    This was a criticism raised particularly against Basel I; see for example Weber/Darbellay, The regulatory use of credit ratings in bank capital requirement regulations, Journal of Banking Regulation 10 (2008), p. 1 (3).

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  1. Rechtswissenschaftliche Fakultät, Friedrich-Schiller-Universität Jena, 07737, Jena, Germany

    Christoph Ohler

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  1. Chair for Constitutional and Administrative Law European Law, European and International Economic Law, Passau University, D-94030, Passau, Germany

    Christoph Herrmann LL.M

  2. Department of European Law, Hamburg University, Schlüterstraβe 28, 20146, Hamburg, Germany

    Jörg Philipp Terhechte (Assistant Professor of Law, Faculty of Law) (Assistant Professor of Law, Faculty of Law)

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Ohler, C. (2010). International Regulation and Supervision of Financial Markets After the Crisis. In: Herrmann, C., Terhechte, J.P. (eds) European Yearbook of International Economic Law 2010. European Yearbook of International Economic Law, vol 1. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-78883-6_1

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