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The concept of state sovereignty is increasingly challenged by a proliferation of international economic instruments and major international economic institutions. States from both the south and north are re-examining and debating the extent to which they should cede control over their economic and social policies to achieve global economic efficiency in an interdependent world. International lawyers are seriously rethinking the subject of state sovereignty, in relation to the operation of the main international economic institutions, namely the WTO, the World Bank and the International Monetary Fund (IMF). The contributions in this volume, bringing together leading scholars from the developed and developing worlds, take up the challenge of debating the meaning of sovereignty and the impact of international economic law on state sovereignty. The first part looks at the issues from the perspectives of general international law, international economic law and legal theory. Part two discusses the impact of trade liberalisation on the sovereignty of both industrialised and developing states and Part three concentrates on the challenge to state sovereignty created by the proliferation of investment treaties and the significant recent growth of investment treaty based arbitration cases. Part four focuses on the domestic and international effects of international financial intermediaries and markets. Part five explores the tensions and intersections between the international regulation of trade and investment, international human rights and state sovereignty

The recently enacted Treaty on the Stability, Coordination and Governance of the Economic and Monetary Union (generally referred to as the Fiscal Compact) has introduced a ‘golden rule’, which is a detailed obligation that government budgets be balanced. Moreover, it required the 25 members of the EU which signed the Treaty in March 2012, to incorporate this ‘golden rule’ within their national Constitutions. This requirement represents a major and unprecedented development, raising formidable challenges to the nature and legitimacy of national Constitutions as well as to the future of the European integration project. This book analyses the new constitutional architecture of the European Economic and Monetary Union (EMU), examines in a comparative perspective the constitutionalization of budgetary rules in the legal systems of the Member States, and discusses the implications of these constitutional changes for the future of democracy and integration in the EU. By combining insights from law and economics, comparative institutional analysis and legal theory, the book offers a comprehensive survey of the constitutional incorporation of new fiscal and budgetary rules across Europe and a systematic normative discussion of the legitimacy issues at play. It thus contributes to a better understanding of the Euro-crisis, of the future of the EU, and the reforms needed towards a deeper and genuine EMU.

The law of foreign investment is at a crossroads. In the wake of an unprecedented global financial crisis and a sharp surge of investment arbitration cases, states around the world are reflecting on the pros and cons of the current liberal investment regime and exploring new ways ahead. This book brings together leading investment lawyers from more than 20 main jurisdictions of the world to tackle the challenge of producing a first comparative study of foreign investment law. Based on the General and National Reports presented at the 'Protection of Foreign Investment' Session at the 18th International Congress of the International Academy of Comparative Law (Washington DC, July 2010), the book is a unique resource for investment lawyers. Part I of the book presents a comparative overview of key aspects of foreign investment protection in the world today, including admission, investment contracts, treatment standards, tax regime and incentives, performance requirement, property and expropriation, monetary transfer and dispute settlement. Part II presents in-depth and detailed accounts of the investment laws of more than 20 jurisdictions, including Argentina, Australia, Canada, China, Croatia, Czech Republic, Ethiopia, France, Germany, Greece, Italy, Japan, South Korea, Macau, Peru, Portugal, Russia, Singapore, Slovenia, Turkey, the UK and the USA. The book will be an invaluable guide to legal and business communities with an interest in the law and practice of foreign investment in the world in general and in these jurisdictions in particular.

Insufficient liquidity can trigger fire sales and wreak havoc on a financial system. To address these challenges, the Federal Reserve (the Fed) and other central banks have long had the authority to provide financial institutions liquidity when market-based sources run dry. Yet, liquidity injections sometimes fail to quell market dysfunction. When liquidity shortages persist, they are often symptoms of deeper problems plaguing the financial system. This Essay shows that continually pumping new liquidity into a financial system in the midst of a persistent liquidity shortage may increase the fragility of the system and, on its own, is unlikely to resolve the deeper problems causing those liquidity shortages to persist. This Essay suggests that when facing persistent liquidity shortages, the Fed should instead use the leverage it enjoys by virtue of controlling access to liquidity to improve its understanding of the ailments causing the market dysfunction to persist and to help address those underlying issues. When liquidity shortages persist, they will often indicate that market participants lack critical information about risk exposures or that they are concerned financial institutions or other entities lack sufficient capital in light of the risks to which they are exposed. Providing credible information and working with other policymakers to ensure the overall financial system is sufficiently capitalized are thus among the issues that the Fed should prioritize when facing persistent liquidity shortages. This Essay thus provides a new paradigm for how the Fed can utilize its lender-of-last-resort authority to prevent a nascent financial crisis from erupting into one that inflicts significant harm on the real economy. The heart of this Essay brings these dynamics to life through a close examination of the Fed's actions during the early stages of the 2007-2009 financial crisis (the Crisis). Using transcripts from Fed meetings and other primary materials, this Essay reconstructs the first thirteen months of the Crisis. The analysis reveals more than a year during which Fed officials could have taken an array of actions that may have reduced the size of the Great Recession and the amount of credit risk and moral hazard stemming from the government's subsequent interventions. The analysis also demonstrates specific ways that the Fed's lender-oflast-resort authority could serve as the type of responsive and dynamic regulatory tool that the Fed requires when seeking to restore stability during the early phases of a panic.

Introduction / Andreas Dombret, Patrick S. Kenadjian -- Cutting the gordian knot or splitting hairs : the debate about breaking up the banks / Andreas Dombret -- \"What kind of financial system do we want? : a global private sector perspective\" / Paul Achleitner -- Rescue by regulation? Key points of the Liikanen report / Jan Pieter Krahnen -- Bank structural reform and too-big-to-fail / Miguel de la Mano -- The Volcker rule / Debra Stone -- Confronting the reality of structurally unprofitable safe banking / Adam S. Posen -- Ten arguments against breaking up the big banks / Douglas J. Elliot -- Structural solutions : blinded by Volcker, Vickers, Liikanen, Glass Stegall and narrow banking / Randall D. Guynn and Patrick S. Kenadjian -- Structural separation and bank resolution / Simon Gleeson

Asia's demand for second-generation financial institutions and markets needs to be met in order for the region's further development to be sustained. This book provides a compelling, fact-based assessment of current practices and regulations in Asia's financial institutions and markets and carefully documents the exciting opportunities and challenges that lie ahead in the region's financial systems. This book differs in design from typical treatments of financial institutions and markets because its focus is on Asia rather than using the US model (in terms of market configurations or products) as a benchmark, and its takes a contemporary and forward-looking view of financial markets. Examples of practice from Asia are used to illustrate major accepted themes in finance and financial regulation. To the extent that Asia's main economies share characteristics that are distinct, for example, in the relationship between government and the banking sector, or in aspects of corporate governance, the book will discuss the consequences for market operation and intermediation. The book's carefully structured facts and rigorously argued analysis carry important implications both for students in business and law and for professionals new to financial markets in Asia. It will change the way that Asian financial markets and institutions is taught in universities as well as provide a valuable resource for professionals working in finance in Asia.

We address the question of how international public goods are financed by analyzing voting in the U.S. Congress on legislation to increase the U.S. contribution to the International Monetary Fund (IMF). We argue that legislators are more likely to vote in favor of an increase (1) the more campaign contributions they obtain from banks that specialize in international lending, and (2) the greater the share of high-skilled “proglobalization” workers in their districts. The first argument supports the inference that a financially strong IMF mitigates the risks of international lending, to the benefit of the lending banks. The second reflects our claim that voters view the IMF as a positive force for global economic integration that—following Stolper-Samuelson reasoning—benefits high-skilled workers. Lastly, we analyze IMF loan decisions and find modest support for the claim that IMF policy reflects the interests of major international banks. Overall, our results suggest that private actors within the United States have individual stakes in funding the IMF.We presented earlier versions of this paper at the 8th Annual International Society for New Institutional Economics Conference (ISNIE), Tucson, Ariz., September–October 2004, and at the Delegation to International Organization Conference, Del Mar, Calif., September 2003. We thank participants for comments. We also thank Michael Hiscox, Mathew McCubbins, J. R. DeShazo, David Lake, Jeffry Frieden, James Vreeland, William R. Clark, Erica Gould, Joseph Joyce, Devesh Kapur, Louis Pauly, Shanker Satyanath, Beth Simmons, and Michael Tierney for suggestions; and Mark Farrales and Molly James for excellent research assistance.

The Future of Financial Regulation is an edited collection of papers presented at a major conference at the University of Glasgow in spring 2009, co-sponsored by the Economic and Social Research Council World Economy and Finance Programme and the the Australian Research Council Governance Research Network. It draws together a variety of different perspectives on the international financial crisis which began in August 2007 and later turned into a more widespread economic crisis following the collapse of Lehman Brothers in the autumn of 2008. Spring 2009 was in many respects the nadir since valuations in financial markets had reached their low point and crisis management rather than regulatory reform was the main focus of attention. The conference and book were deliberately framed as an attempt to re-focus attention from the former to the latter. The first part of the book focuses on the context of the crisis, discussing the general characteristics of financial crises and the specific influences that were at work this time round. The second part focuses more specifically on regulatory techniques and practices implicated in the crisis, noting in particular an over-reliance on the capacity of regulators and financial institutions to manage risk and on the capacity of markets to self-correct. The third part focuses on the role of governance and ethics in the crisis and in particular the need for a common ethical framework to underpin governance practices and to provide greater clarity in the design of accountability mechanisms. The final part focuses on the trajectory of regulatory reform, noting the considerable potential for change as a result of the role of the state in the rescue and recuperation of the financial system and stressing the need for fundamental re-appraisal of business and regulatory models.

In the aftermath of the global financial crisis, Congress significantly broadened the reach of various regulatory entities through the Dodd-Frank Act. One particular power, found in section 113 of the Act, gives the newly formed Financial Stability Oversight Council (FSOC) the authority to designate nonbank financial institutions (NBFIs) as systemically important financial institutions (SIFIs). Once designated, these nonbank SIFIs are placed under the supervision of the Federal Reserve and subject to enhanced prudential regulation. In 2013, after designating four NBFIs—AIG, GE Capital, Prudential Financial, and MetLife—as systemically important, FSOC turned its attention to the asset management industry. This Note examines the efficacy of the legal framework underlying section 113 for regulating systemic risk when it arises in asset managers. By aligning the enhanced prudential standards mandated by systemic designations with the unique characteristics of the asset management industry, this Note identifies a mismatch created by deploying bank regulatory principles to address systemic risk in nonbank sectors. Ultimately, this Note argues that a better solution to the systemic oversight problem may be to limit FSOC's role as systemic regulator to that of an information-gathering and coordinating device, while leaving prudential regulatory authority with primary regulators.