Human Rights in the Light of the Process of Financialisation

The article deals with the challenges resulting from financialisation, in which we observe an increasing impact of the financial sphere in man’s everyday life. It also considers the effect of this process on the functioning of societies and concludes that the process of creating and applying financial market law must be redefined and human rights issues taken into account. In addition to the activity of the UN and the European Union in promoting the concept of business and human rights, the experiences of recent years show that combining human rights with financial market regulation is possible. To achieve this, however, many actors must be involved and a specific understanding of human rights and values must be adopted, and their protection should constitute the core of the legislator’s activity.

The European Composite Administration Facing the Challenges of Migration

In classical theoretical reflections on international reality, one of the leading paradigms is the belief that the Westphalian order based on sovereign states has evolved into a diverse network of interdependent actors. From a legal perspective, a network such as this has the character of multi-level normative linkages. Legislation with varying degrees of impact in terms of its binding force is enacted within a number of parallel consultative bodies. Within the EU this network takes on a concretised, institutional normative dimension, the so-called European Composite Administration which is evident in specific areas such as cyber security, asylum and migration policies, energy, and financial market regulation. In the European Union, decentralised agencies play a leading role in a such compound bureaucracy. They are one of the main instruments in the European system for harmonising regulation and practices in specific areas of EU activity. In a crisis situation there is an increasing tendency to modify their powers. Within the European Composite Administration, bodies such as EASO, the agency responsible for migration and asylum policies, play a key coordinating role between the Member States. The crisis legitimises institutional changes, by expanding the catalogue of regulatory agencies’ competencies. While practitioners, especially in individual offices in the Member States, may find such processes acceptable in relation to the ideal of effi cient and effective administration, these phenomena may be regarded as worrying from the point of view of control over a growing complex integrated administrative apparatus.

International cooperation on financial market regulation

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.

Fifty Years of Financial Regulation in Germany

This chapter gives an overview on how financial market regulation evolved in Germany since the 1970s. The picture presented is somehow contradicting, as it seems that banking regulation and capital market regulation evolved in a quite different way. As far as banking regulation is concerned, it will be shown that starting with the Herstatt crisis in 1974 there was a clear trend towards tightening and increasing the regulatory perimeter. By analysing how the budget of the German banking supervision authority evolved since 1988, this claim will also be corroborated empirically. The picture with respect to capital market regulation is quite different, however. Here, the regulatory process started back in the year 1990 and, at least for the first decade, it was focused towards liberalizing and modernizing the German capital market. It will be argued that there is an underlying public choice mechanism able to explain this different development in two adjacent areas of financial market regulation.

Part II The Transatlantic Dialogue, 7 The New European Capital Markets

This chapter looks at the new European capital markets. The creation of the European Securities and Markets Authority (ESMA) was ‘an epochal date for EU financial market regulation’. Whereas ESMA's role is primarily one of overall supervision and promotion of supervisory convergence, the 2007–09 financial crisis, which led to its birth, continues incrementally to push the European legislator toward reinforcing ESMA's powers and capturing increasingly more activities under the ‘Single Rulebook’. With the proposal of a Capital Markets Union and Brexit, this trend is likely to continue. Potentially, the European Union is now well placed to forge a new paradigm for the regulation of capital markets, given the increased focus and the technical expertise which ESMA brings to bear. At least in theory, the EU should no longer be beholden to US or international models for its regulatory models.

The Variable Nature of Ownership of Emission Units in the Intersection of Climate Law, Property Law, and the Regulation of Financial Markets

The article analyses the impact of the origins of emission units in transnational climate policy on market participants in the EU ets and the extension of financial-market regulation to the European carbon market. To assess the consequences of the public-private nature of emission units, a broad view of ownership is taken. Ownership is understood as the legal position of the holder of emission units, being an aggregate of elements of private law but also climate law and financial-market regulation. As a consequence, a picture emerges of a legal position variable in the personal, temporal, and spatial dimensions, following policy-design choices and the evolution of regulation of carbon markets. The ownership of emission units reflects the ongoing balancing of the different public-policy goals of the EU ets and differs from economic theories laying the foundations of emission trading. Due to the necessity for a proactive management of the scheme, regulatory intervention and risk have become inherent features of the ownership of the units, and the impact of changes will vary across different market participants.

APPLICATION IN RUSSIA OF THE EXPERIENCE OF GERMANY AS AN OECD MEMBER COUNTRY IN THE FIELD OF FINANCIAL MARKET REGULATION

The article deals with the issue of the efficiency of financial market regulation by the example of Germany as a member-state of the OECD. In the beginning it is explained how the financial market regulation system in Germany works. Then it is pointed out risks as well as modern challenges and chances of the German model. Summing up it is estimated whether it is reasonable to regulate Russian financial market on German pattern taking into account national specifics of the countries considered. Respective analysis in Germany Russia format is extrapolated to European Union-Eurasian Economic Union area with the conclusion about the possibility to apply some EU regulation mechanisms in the EEU region.

The role of the state in ensuring digital transformation of banking sector

In the age of digital technologies, the main factor of competitiveness in the financial market is “digital capital”. Using developments in the field of information technology, banks change the format and methods of providing their products and services, participate in the provision of services that are not typical for them. In such circumstances, banks have to completely transform their business and build it on the basis of platforms. Changes in the operating conditions of the financial market entail changes in the rules of conduct on it and approaches to its regulation. Investing in technologies, creating and developing ecosystems require significant financial investments from banks, which not all banks can afford. This research analyzes the possibilities of using digital capital by the most successful Russian banks in building and developing ecosystems. The main models of banking ecosystems used in Russian practice are systematized. The necessity of state participation in financial support of the digital transformation of the banking sector is justified. The steps taken by the Bank of Russia in this direction are evaluated. The article summarizes the Bank of Russia’s efforts to develop approaches to financial market regulation to ensure information security and prevent financial isolation. Steps taken by the regulator to ensure an equal access to financial services for all citizens, equal opportunities for competition of various financial market players.