Multilateral governance of financial markets: the case of sovereign wealth funds

2020 ◽  
Vol 61 (4) ◽  
pp. 391-410
Author(s):  
George Gilligan
Keyword(s):  
Financial Markets ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Sovereign Wealth Funds ◽  
Investment Activity ◽  
Fund Managers ◽  
The Great Depression ◽  
The Us ◽  
The Uk

The glaring deficiencies of the US sub-prime market in 2007 evolved through 2008 and 2009 into a fully blown global financial crisis (GFC), the worst since the Great Depression of the 1930s. That in turn has spawned sovereign debt crises in a number of European countries in 2010, most dramatically in Greece and Ireland. These events have prompted not only national responses, such as the austerity budgets that have been handed down by a large number of European governments including Greece, Spain and the UK, but also multilateral regulatory initiatives under the auspices of organisations such as the G202 and the International Monetary Fund (IMF). Governments across the world have felt compelled to hurl billions ofdollars into saving financial institutions from collapse, in some jurisdictions effectively the nationalisation of some banks. The regulatory landscape of the financial sector both nationally and internationally is being dramatically reshaped. This increasing regulatory activism of the state is clearly recognised and has received widespread support. What is less widely known is the increasing number of jurisdictions in recent years that are ramping up their levels of investment activity and the potential regulatory repercussions of larger staterelated pools of capital in international financial markets. This paper considers the issue of multilateral regulation of financial markets through the lens of Sovereign Wealth Funds (SWFs),3 discussing their evolution, especially the implications of their increasing size and prevalence in relation to developments in multilateral governance of the financial sector. The paper incorporates the findings of a number of semistructured interviews (n = 42) with SWF stakeholders in Australia, China, Norway, the UK and the US. Those interviewed include: SWF personnel, regulators (both national and international), analysts, bankers, brokers, fund managers, governance professionals, academics and financial journalists.

Foreign States in Domestic Markets

2021 ◽  
Author(s):  
Mark Thatcher ◽  
Tim Vlandas
Keyword(s):  
Political Economy ◽  
Financial Markets ◽  
Domestic Politics ◽  
National Policy ◽  
Sovereign Wealth Funds ◽  
Policy Makers ◽  
Domestic Markets ◽  
The Us ◽  
The Uk ◽  
Domestic Economies

Political economy debates have focused on the internationalization of private capital. But foreign states increasingly enter domestic markets as financial investors. How do policy makers in recipient countries react? Do they treat purchases as a threat and impose restrictions or see them as beneficial and welcome them? What are the wider implications for debates about state capacities to govern domestic economies in the face of internationalization of financial markets? In response, the book develops the concept of ‘internationalized statism’—governments welcoming and using foreign state investments to govern their domestic economies—and applies it to the most prominent overseas state investors: Sovereign Wealth Funds (SWFs). Many SWFs are from Asia and the Middle East and their number and size have greatly expanded, reaching $9 trillion by 2020. The book examines policies towards non-Western SWFs buying company shares in four countries: the US, the UK, France, and Germany. Although the US has imposed significant legal restrictions, the others have pursued internationalized statism in ways that are surprising given both popular and political economy classifications. The book argues that the policy patterns found are related to domestic politics, notably the preferences and capacities of the political executive and legislature, rather than solely economic needs or national security risks. The phenomenon of internationalized statism underlines that overseas state investment provides policy makers in recipient states with new allies and resources. The study of SWFs shows how and why internationalization and liberalization of financial markets offer national policy makers opportunities to govern their domestic economies.

Bank Resolution and Crisis Management

2016 ◽  
Author(s):  
Gleeson Simon ◽  
Guynn Randall
Keyword(s):  
Deposit Insurance ◽  
Global Financial Crisis ◽  
Policy Makers ◽  
The Great Depression ◽  
Bank Resolution ◽  
The Us ◽  
Bankruptcy Code ◽  
The Uk ◽  
Federal Deposit Insurance ◽  
Financial Transactions

The 2008 global financial crisis ushered in the biggest explosion in new bank regulation around the world since the Great Depression. Governments and regulators have sought to put measures in place to prevent the failure of banks, but have acknowledged the need for measures to address what happens when banks fail or are threatened with failure. This book deals with the measures which European, US, and international law and policy-makers have sought to put in place to manage failure of financial institutions. Measures such as ‘bail-out’ (protecting private shareholders and creditors against losses) and ‘bail-in’ (imposing losses on shareholders and long-term creditors without causing contagion among short-term creditors) are discussed. The work includes summaries and commentary on the EU Bank Recovery and Resolution Directive, the UK resolution laws including the Banking Act 2009 and amendments to that Act, the Orderly Liquidation Authority under Title II of the US Dodd‒Frank Act, resolution under Chapter 11 of the US Bankruptcy Code, the proposed new Chapter 14 to the US Bankruptcy Code, and the bank resolution provisions of the US Federal Deposit Insurance Act. Special emphasis is given to the practical effect of such measures on financial transactions and their impact on arrangements, such as netting and set-off. There is also commentary on the role of depositor protection schemes and their role in returning money to the depositors in a failing bank.

Transparency Regulation in Financial Markets – Moving into the Surveillance Age?

2011 ◽  
Vol 2 (3) ◽  
pp. 305-321
Author(s):  
Iris H-Y Chiu
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Regulatory Control ◽  
Legal Reforms ◽  
The Global Financial Crisis ◽  
Risk Oversight

In the wake of the global financial crisis, the trajectory of legal reforms is likely to turn towards more transparency regulation. This article argues that transparency regulation will take on a new role of surveillance as intelligence and data mining expand in the wholesale financial sector, supporting the creation of designated systemic risk oversight regulators.The role of market discipline, which has been acknowledged to be weak leading up to the financial crisis, is likely to be eclipsed by a more technocratic governance in the financial sector. In this article, however, concerns are raised about the expansion of technocratic surveillance and whether financial sector participants would internalise the discipline of regulatory control. Certain endemic features of the financial sector will pose challenges for financial regulation even in the surveillance age.

13 Resolution in the UK and US: Variations to the Same Goals

2016 ◽  
Author(s):  
Krimminger Michael
Keyword(s):  
Deposit Insurance ◽  
Global Financial Crisis ◽  
Single Point ◽  
Insurance Fund ◽  
Troubled Asset Relief Program ◽  
Point Of Entry ◽  
The Us ◽  
The Uk ◽  
Federal Deposit Insurance ◽  
National Governments

This chapter explores the US and UK’s response to the 2007–9 Global Financial Crisis. In both cases, funding for the resolution and restructuring of failing financial companies came from public sources-generally national governments and central banks funded by the private creditors or other private sources. In the UK, the resolution actions relied solely on taxpayer financing. In the US, the government’s actions relied on Federal Reserve funding, Treasury funding through the Troubled Asset Relief Program (TARP), and Federal Deposit Insurance Corporation (FDIC) funding from the Deposit Insurance Fund. The chapter also assesses the role of bail-in under the Resolution Authorities and concludes with a brief summary of the UK and EU approach to single point of entry (SPOE) strategy.

Measuring Dependence Between the USA and the Asian Economies: A Time-varying Copula Approach

2019 ◽  
Vol 20 (4) ◽  
pp. 962-980 ◽  
Author(s):  
Shegorika Rajwani ◽  
Dilip Kumar
Keyword(s):  
Financial Crisis ◽  
Stock Market ◽  
Financial Markets ◽  
Stock Markets ◽  
Global Financial Crisis ◽  
Tail Dependence ◽  
Time Varying ◽  
The Us ◽  
Asian Economies ◽  
Copula Approach

During the past few years, many of the financial markets have gone through devastating effects due to the crisis in one or the other economy of the world. The recent global financial crisis has triggered dramatic movements in various stock markets which may arise from interdependence or contagion between the markets. This article attempts to measure the contagion between the equity markets of Asia and the US stock market. The countries considered in the Asian group are China, India, Indonesia, South Korea, Taiwan, Hong Kong, Malaysia and Japan. Most of the Asian economies have experienced drastic higher volatility and uncertainty in the financial markets. If the markets are contagious, then the investors will be unable to reap benefits through international diversification of the portfolio. In such a case, the policymakers will further frame policies so that they can insulate themselves from inflicting heavy damage from various crises. To achieve our goal, we make use of the time-varying copula approach which helps us to study the joint behaviour of the series based on their marginal distribution. Time-varying copula approach can also capture the non-linear dependence in the series and exhibits a rich pattern of tail behaviour. Our findings support the contagion between the Asian stock markets and the US stock market during the global financial crisis. This article also highlights that the increased tail dependence is an important factor for the contagion between the Asian stock markets and the US market.

Vultures in Courts: Why the UNCTAD Principles on Responsible Financing Cannot Stop Litigation

2015 ◽  
Vol 28 (4) ◽  
pp. 849-862 ◽  
Author(s):  
MAURO MEGLIANI
Keyword(s):  
New York ◽  
Financial Markets ◽  
Sovereign Debt ◽  
Legal Status ◽  
Legal Framework ◽  
Federal Courts ◽  
The Public ◽  
The Us ◽  
Us Supreme Court ◽  
Abusive Behaviour

AbstractThe decision of the US Supreme Court rendered in NML v. Argentina has enabled the vulture funds to enforce in full their claims against the payments to be made by Argentina in favour of those holders who had tendered their bonds under a previous exchange offer. This scenario may have a disruptive impact on the functioning of the financial markets and endanger the restructuring processes of sovereign debt. The race to the courts by the vulture funds could be stopped under the UNCTAD Principles on Responsible Financing where the behaviour of those creditors who acquire debt instruments of sovereigns in distress and remain aloof from a restructuring to secure preferential treatment is marked as abusive. Unfortunately, so far the legal status of this abusive behaviour is unable to overturn the interpretation of the pari passu clause under New York law given by the US Federal Courts which stands at the base of the problem. To overcome this impasse the suggestion is to insert in the UN proposal of a multilateral legal framework for sovereign restructuring processes a specific provision qualifying as overriding a mandatory restructuring plan approved through a certain quorum which has received certification by the IMF. This qualification would serve the purpose of applying the plan to all creditors, and not just to those who register under the process. Moreover, this qualification would be considered as part of the public policy of the states participating to the UN proposal so as to block the enforcement of judgments rendered in non-participating fora.

Financial Structure and Incentives

2012 ◽  
Vol 221 ◽  
pp. R23-R30
Author(s):  
Martin Čihák ◽  
Asli Demirgüç-Kunt
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Financial Systems ◽  
Regulatory Approach ◽  
Private Incentives ◽  
The Global Financial Crisis

The article connects two streams of recent research on the financial sector. The first is the regulation literature, which emphasises the central role of incentives in the financial sector. It points out that the challenge of financial sector regulation, highlighted by the global financial crisis, is to align private incentives with public interest without taxing or subsidising private risk-taking. The second stream of research relates to financial structures and examines the mix of financial institutions and financial markets in an economy. It finds that, as economies develop, services provided by financial markets become comparatively more important than those provided by banks. The article brings these two streams together, pointing out that — as financial systems develop from bank-based to market-based — a traditional regulatory approach that relies on banking ratios becomes less effective. There is thus a greater need for properly monitoring and addressing the underlying incentive weaknesses in market-based systems.

Another Look at the Tuesday Effect in Australia

2004 ◽  
Vol 07 (01) ◽  
pp. 77-89 ◽  
Author(s):  
Chien-Ting Lin ◽  
Lee-Kian Lim
Keyword(s):  
Financial Markets ◽  
Weekend Effect ◽  
The Us ◽  
The Uk

Weekend effects have been well known in many financial markets. Australia however displays its effect on Tuesdays rather than on Mondays. In this study, we investigate on the possible linkage between the US Monday and Australian Tuesday returns. We document that the Tuesday effect in Australia is one-way Granger caused by the weekend effect in the US conditional on the weekend effects in the UK and Japanese markets. Furthermore, in the post-1987 period where the US Monday returns are positively significant, the Australian Tuesday return also turns out to be positive. This latter finding provides further evidence that the anomaly in Australia is induced by the weekend effect in the US.

scholarly journals Atif Mian and Amir Sufi. House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again. University of Chicago Press. USA. 2014. 192 pages.

2013 ◽  
Vol 52 (3) ◽  
pp. 247-260
Author(s):  
Asad Zaman Kemal
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Great Depression ◽  
Global Financial Crisis ◽  
Aggregate Demand ◽  
Jel Classification ◽  
Recent Book ◽  
The Great Recession ◽  
The Great Depression ◽  
University Of Chicago Press

This is a review and a summary of some of the key arguments presented by Mian and Sufi in their recent book “House of Debt.” It highlights the contribution of Mian and Sufi by showing how they have solved the mystery of why there was a huge drop in aggregate demand during the Great Depression of 1929 and also following the recent Global Financial Crisis of 2007-08. The article shows how major economists like Keynes, Friedman, Lucas and others tried and failed to provide an adequate explanation of this mystery. The key to the mystery is the huge amount of levered debt present during both of these economic crises. The solution suggested by Mian and Sufi is to replace interest based debt by equity based contracts in financial markets. This solution resonates strongly with Islamic teachings on finance. These links are also highlighted in this article. JEL classification: B22, E12, E32 Keywords: Great Depression, Global Financial Crisis, Debt-Deflation, Levered Debt

London

2018 ◽  
Author(s):  
Richard Roberts
Keyword(s):  
New York ◽  
Financial Services ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Services Sector ◽  
The Us ◽  
The Global Financial Crisis ◽  
The Uk ◽  
The Impact ◽  
The Eu

At the onset of the Global Financial Crisis in 2007 London was one of the two foremost global financial centres, along with New York. London experienced a 12 per cent fall in wholesale financial services jobs in 2008–9, but a recovery got underway in 2010 and London’s wholesale financial services sector staged a wavering advance. But now there were new challenges, in particular the avalanche of financial regulation coming from the UK, the EU, the US and the G20. Fintech engendered new uncertainties. The impact of Brexit was uncertain, but mostly expected to be negative, at least in the short-term. Furthermore, there was growing competition from Asian and other financial centres. Nevertheless, London remained pre-eminent as one of the two largest global concentrations of wholesale financial services activity and at the top of the Global Financial Centres Index.

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