The Logic of Financial Nationalism : The Challenges of Cooperation and the Role of International Law

Using Case Studies Ranging From Cross-border Bank Resolution To Sovereign Debt, The Author Analyzes The Role Of International Law In Protecting Financial Sovereignty, And The Risks For The Global Financial System Posed By The Lack Of International Cooperation. Despite The Post-crisis Reforms, The Global Financial System Is Still Mainly Based On A Logic Of Financial Nationalism. International Financial Law Plays A Major Role In This Regard As It Still Focuses More On The Protection Of National Interests Rather Than The Promotion Of Global Objectives. This Is An Inefficient Approach Because It Encourages Bad Domestic Governance And Reduces Capital Mobility. In This Analysis, Lupo-pasini Discusses Some Of The Alternatives (such As The European Banking Union, Regulatory Passports, And International Financial Courts), And Offers A New Vision For The Role Of International Law In Maintaining And Fostering Global Financial Stability. In Doing So, He Fills A Void In The Law And Economics Literature, And Puts Forward A Solution To Tackle The Problems Of International Cooperation In Finance Based On The Use Of International Law-- Using Case Studies Ranging From Cross-border Bank Resolution To Sovereign Debt, The Author Analyses The Role Of International Law In Protecting Financial Sovereignty, And The Risks For The Global Financial System Posed By The Lack Of International Cooperation. Despite Reforms, International Financial Law Is Still Mainly Based On Financial Nationalism, Which Is An Inefficient Approach Because It Encourages Bad Domestic Governance And Reduces Capital Mobility. In This Analysis, Lupo-pasini Discusses Some Of The Alternatives (such As A European Banking Union, Binding International Law And International Financial Courts), And Offers A New Vision For The Role Of International Law In Maintaining And Fostering Global Financial Stablity. In Doing So, He Fills A Void In The Law And Economics Literature, And Puts Forward A Solution To Tackle The Problems Of International Cooperation In Finance Based On The Use Of International Law-- Machine Generated Contents Note: Introduction; 1. The Logic Of Externalities; 2. Nationalism And Cooperation In International Finance; 3. The Perils Of Home-country Control; 4. Cross-border Banking; 5. Nationalism In Sovereign Debt; 6. Coordination Battles In Otc Derivatives Regulation; 7. Centralization And Its Limits; 8. Compliance And Global Coalitions In International Finance Law; 9. A Different Path To Financial Integration: Regulatory Passports; 10. Dispute Resolution; Concluding Remarks. Federico Lupo-pasini. Includes Bibliographical References And Index. Cover Half Title Title page Imprints page Contents List of Tables Acknowledgments Introduction Financial Integration and Instability 1 The Logic of Externalities 1.1. An Interconnected Financial System 1.1.1. A Typical Bank Balance Sheet 1.1.2. Financial Infrastructures 1.2. Systemic Risk 1.3. The Logic of Externalities 1.3.1. Firms’ Behaviors 1.3.2. Negative Externalities 1.3.3. Externalities and the Law 1.3.4. Prudential Regulations 1.4. Financial Stability and the State 1.4.1. Choice of Players 1.4.2. Distribution of Losses 1.4.3. Contractual Rights and Legal Protection 2 Nationalism and Cooperation in International Finance 2.1. Financial Integration and Global Systemic Risk 2.2. Global Financial Stability in a World of Sovereign States 2.2.1. The National Interest 2.2.2. Principal–Agent Model in an International Setting 2.3. Coordination Problems 2.4. Externalities and the Role of International Law 2.5. The Logic of Financial Nationalism 2.5.1. Financial Nationalism in International Law 2.5.2. Financial Nationalism as a Negative Externality 2.6. When International Law Works 3 The Perils of Home-Country Control 3.1. Home–Host Supervisory Cooperation in International Law 3.1.1. The Beginnings: The 1975 Concordat and Host Country Dominance 3.1.2. The Rise of Home-Country Control in Banking Supervision 3.2. The Evolution of the Home-Country Model in Europe 3.3. Home-Country Model and Financial Integration 3.4. The Logic of Financial Nationalism in Home-Country Failures 3.4.1. Principal–Agent Problems 3.4.2. The Lack of Accountability 3.5. The Icesave Dispute 3.6. Concluding Remarks 4 Cross-Border Banking 4.1. Crisis Resolution Policies in International Law 4.1.1. The Policy of Financial Crises 4.1.2. The Challenges of an International Legal Regime 4.2. Regulatory Asymmetries in Bank Insolvency Regimes 4.2.1. Regulatory Asymmetries in Bank Insolvency Regimes 4.2.2. Ring-Fencing and “Stability Wars” 4.3. The Bailout Game 4.3.1. The Economics of International Bailouts 4.3.2. The Resolution of Fortis Bank 4.4. Challenges in International Bail-ins 4.5. The FSB’s Standards on International Cooperation 4.5.1. The FSB Principles for Cross-Border Effectiveness of Resolution Actions 4.5.2. Challenges Ahead 5 Nationalism in Sovereign Debt 5.1. The Political Economy of Sovereign Borrowing and Defaults 5.2. Fiscal Sovereignty and Moral Hazard 5.3. The Economics of Financial Necessity 5.4. Financial Nationalism in Sovereign Debt Restructurings 5.5. Which Solutions? Private Mechanisms v. International Law 6 Coordination Battles in OTC Derivatives Regulation 6.1. Derivatives and Systemic Risk 6.2. The Atlantic Regulatory Divide on OTC Derivatives 6.2.1. The EU and US Responses 6.2.2. Regulatory Battles 6.3. Regulatory Arbitrage and Extraterritoriality 6.4. The Battle for Mutual Recognition 6.4.1. Mutual Recognition in Securities Regulation 6.4.2. The Logic of Cooperation in Mutual Recognition 6.5. The Deal 7 Centralization and Its Limits 7.1. The Arguments for Centralization 7.2. The Financial Trilemma 7.3. The European Banking Union 7.4. Centralization: Not for Everyone 7.5. The “Problem” of Fiscal Solidarity 7.6. Concluding Remarks 8 Compliance and Global Coalitions in International Finance Law 8.1. The Bright and Dark Sides of Soft Laws in International Finance 8.1.1. Prudential Standards 8.1.2. Cross-Border Banking 8.2. Theoretical Loopholes in the Soft Law’s Narrative 8.2.1. Institutional and Market Discipline 8.2.2. Reputation in Cross-Border Banking 8.3. A Political Economy Theory of Compliance for International Finance 8.3.1. The Political Economy of International Finance 8.3.2. Attribution of Rights and Global Coalitions 8.4. Global Coalitions in International Finance 8.4.1. Prudential Regulations 8.4.2. Cross-Border Banking Resolution and Home–Host Arrangements 8.4.3. Sovereign Debt 8.5. Conclusion 9 A Different Path to Financial Integration: Regulatory Passports 9.1. The Law of Financial Integration 9.2. The Economics of Carve-Outs 9.2.1. Protecting Regulatory Autonomy 9.2.2. Carve-outs and Global Systemic Risk 9.2.3. Some Recent Developments 9.3. Regulatory Passports 9.3.1. Essential Characteristics 9.3.2. The Possible Content of the Regulatory Passport 9.3.3. Beyond Regulation: Macro-stability Issues 9.4. The Political Economy of Regulatory Passporting 9.4.1. The Lessons from International Trade 9.4.2. The Economics of Passporting 9.5. The Demise of Multilateralism in Finance 10 Dispute Resolution 10.1. Litigating International Finance 10.2. Adjudication and Compliance 10.3. The Economics of Standing in International Courts 10.4. Remedies and Retaliation 10.5. One or Many International Financial Courts? 10.6. International Prudential Standards 10.7. Cross-Border Banking 10.8. An International Sovereign Bankruptcy Court Concluding Remarks Index "Using case studies ranging from cross-border bank resolution to sovereign debt, the author analyses the role of international law in protecting financial sovereignty, and the risks for the global financial system posed by the lack of international cooperation. Despite reforms, international financial law is still mainly based on financial nationalism, which is an inefficient approach because it encourages bad domestic governance and reduces capital mobility. In this analysis, Lupo-Pasini discusses some of the alternatives (such as a European Banking Union, binding international law and international financial courts), and offers a new vision for the role of international law in maintaining and fostering global financial stablity. In doing so, he fills a void in the law and economics literature, and puts forward a solution to tackle the problems of international cooperation in finance based on the use of international law"-- Provided by publisher