The Evolution of the European Central Bank

This is Queen Mary School of Law Legal Studies Research Paper No. 99/2012, which was later published at Fordham International Law Journal, Spring 2012

The Crisis of 2007-09: Nature, Causes, and Reactions

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Journal of Interntional Economic Law following peer review. The definitive publisher-authenticated version [Journal of International Economic Law 13(3):531-550 2010] is available online at: http://jiel.oxfordjournals.org/content/13/3/531.ful

Towards a New Architecture for Financial Stability: Seven Principles

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Journal of International Economic Law following peer review. The definitive publisher-authenticated version [Journal of International Economic Law 13(3):597-621 2010] is available online at: http://jiel.oxfordjournals.org/content/13/3/597.full.pdf+html

Systemic Risk and Macroprudential supervision

The Oxford Handbook of Financial Regulation is the first comprehensive, authoritative, and state-of-the-art account of the nature of financial regulation

Non-Performing Loans: Regulatory and Accounting Treatments of Assets

Asset quality is an essential part of sound banking. However, asset quality is difficult for banking regulators and investors to assess in the absence of a common, cross-border scheme to classify assets. Currently no standard is applied universally to classify loans, the most sizable asset on many banks’ balance sheets. As a corollary, no common definition of non-performing loans (NPLs) exists. This paper documents divergences in the definition of NPLs across countries, accounting regimes, firms and data sources. The paper’s originality is in attending to the legal, accounting, statistical, economic and strategic aspects of loan loss provisioning (LLP) and NPLs, topics that are multidisciplinary by nature but have not been dealt with in the literature in an integrated fashion before. Since the 2007 Great Financial Crisis (GFC), accounting bodies and prudential regulators are increasingly focused on early recognition of credit losses and enhanced disclosure. A common approach to NPL recognition might complement these initiatives

Central Bank Money: Liability, Asset, or Equity of the Nation?

Source info: Cornell Legal Studies Research Paper 20-46Source info: Cornell Legal Studies Research Paper 20-46Based on legal arguments, we advocate a conceptual and normative shift in our understanding of the economic character of central bank money (CBM). The widespread treatment of CBM as a central bank liability goes back to the gold standard, and uses analogies with commercial bank balance sheets. However, CBM is sui generis and legally not comparable to commercial bank money. Furthermore, in modern economies, CBM holders cannot demand repayment of CBM in anything other than CBM. CBM is not an asset of central banks either, and it is not central bank shareholder equity because it does not confer the same ownership rights as regular shareholder equity. Based on comparisons across a number of legal characteristics of financial instruments, we suggest that an appropriate characterization of CBM is as ‘social equity’ that confers rights of participation in the economy’s payment system and thereby its economy. This interpretation is important for macroeconomic policy in light of quantitative easing and potential future issuance of central bank digital currency (CBDC). It suggests that in robust economies with credible monetary institutions, and where demand for CBM is sufficiently and sustainably high, large-scale issuance such as under CBDC is not inflationary, and it does not weaken public sector finances