Document Type

Article

Publication Date

Winter 2015

Disciplines

Banking and Finance Law | Business Organizations Law | Commercial Law | Insurance Law | International Law | International Trade Law | Law and Economics | Securities Law

Abstract

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- to combined micro- and macroprudential finance-regulatory regimes is surely to be welcomed, for reasons that this author and others have elaborated in many earlier articles. The old ‘lean versus clean’ debate is resolved once again now in favor of leaning – this time not only in the realm of monetary policy, but in that of its cousin finance-regulatory policy as well. The victory does, however, raise certain new legal challenges to which predominantly microprudential finance-regulatory regimes are not typically subject – challenges of which legal scholars, regulators, policymakers and other financially-oriented lawyers will wish to remain mindful.

This Article aims to assist that endeavor by exhaustively anticipating, cataloguing, and provisionally addressing all of the mentioned challenges, in order that interested parties might thereby be able to find comprehensive treatment of the subject in one place. The hope is that this will ultimately make for both better theory and better practice where finance and its regulation are concerned.

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