The FinReg Blog – Commentary by faculty and affiliates of the Duke Law Global Financial Markets Center

Fintech Toolkit: Smart Regulatory and Market Approaches to Fintech Innovation

Posted on July 6, 2020July 6, 2020 by Dirk Zetzsche, Douglas Arner, Ross Buckley and Atilla Kaiser-Yücel

Fintech is re-shaping the financial sector at an unprecedented pace and driving structural changes by digital transformation. Fintech can stimulate competition and product variety and generate positive outcomes for societies and economies. Capturing these upsides, however, requires adequate regulatory responses to Fintech innovation. An enabling FinTech ecosystem needs to support innovation balanced with financial inclusion, […]

The Value of Central Bank Liquidity During a Pandemic

Posted on July 3, 2020July 3, 2020 by Haelim Anderson, Jin-Wook Chang and Adam Copeland

The global spread of COVID-19 has triggered large disruptions in financial markets. In response, central banks, such as the Federal Reserve, have created and continue to run a range of facilities to improve liquidity in financial markets, with the goal of promoting economic recovery. How effective are these facilities during a pandemic? In this blog […]

Digital Asset Market Evolution

Posted on July 2, 2020July 2, 2020 by Wulf A. Kaal

Throughout history, evolving markets were subject to evolution and de-evolution cycles. The nascent market for digital assets is no exception. Since its inception in 2009, the rapid proliferation of the digital asset market in 2016-18 was followed by significant downward corrections in 2018-19 (called the “crypto winter”). Digital assets cover all types of virtual and […]

Shadow Banking in China Compared to Other Countries

Posted on July 1, 2020July 1, 2020 by Franklin Allen and Xian Gu

China’s shadow banking sector has grown rapidly in the last decade. While bank loans still dominate the financial system as a main source of funding, the shadow banking sector reached 32.9 percent of total social financing by 2016, though it then fell to 24.2% percent by 2019. Households and corporations benefit from the growing shadow […]

Commercial Law Intersections: Coordination Failures and the Quest for Legal Coherence

Posted on June 30, 2020June 29, 2020 by Giuliano G. Castellano and Andrea Tosato

Commercial law is the legal backbone of markets and economies. Yet, over time, it has evolved into a fragmented bundle of subject-specific legal and regulatory regimes that govern non-consumer transactions and corporate actions. Some of these branches of commercial law have ancient origins, while others are more recent emergences. The laws governing secured transactions and […]

Macroprodential objectives and challenges

Posted on June 29, 2020June 28, 2020 by Alfred Duncan and Charles Nolan

Microprudential regulation aims to prevent the government from being faced with a choice between spending taxpayer money to bailout an insolvent financial institution or suffering a financial and economic collapse. Banking collapses are so costly that it is difficult to resist bailouts when they happen. But the expectation of bailouts generates moral hazard, stoking leverage […]

Institutional Diversity and Bank Stability – Evidence from European Countries

Posted on June 26, 2020June 26, 2020 by Christopher F. Baum, Caterina Forti Grazzini and Dorothea Schäfer

The COVID-19 crisis is a reminder that resilient and powerful financial and banking systems are essential. In EU member states, the banking sector is the most important part of the financial system and the central source of finance for small and medium enterprises (SMEs), which make up around 99 percent of all EU companies. The […]

Seven Disclosure Recommendations for Cryptocurrency and Utility Token Issuers

Posted on June 25, 2020June 25, 2020 by Nicholas Krapels and Daniel Liebau

In 2017/18, the total market capitalization of cryptocurrency markets reached all-time highs. At the same time, certain projects like BitConnect made their name as one of the most prominent ICO scams. Therefore, a stain remains on the digital asset industry from the accumulation of failed projects and subpar investment returns since the peak of the […]

Macroprudential Capital Requirements with Non-Bank Finance

Posted on June 24, 2020June 23, 2020 by Kyle Dempsey

Excessive risk-taking in the financial sector contributed to the Global Financial Crisis of 2007-2009, leading many policymakers to consider tightening existing regulations or imposing new ones altogether. One such proposal is to tighten bank capital requirements, which have been a cornerstone of international financial regulation since the 1980s. At least part of capital requirements’ attractiveness […]

The FDIC Should Not Allow Commercial Firms to Acquire Industrial Banks

Posted on June 23, 2020June 23, 2020 by Arthur E. Wilmarth, Jr.

Industrial banks and industrial loan companies (collectively referred to as “ILCs”) are FDIC-insured, state-chartered depository institutions. In 1987, ILCs received a statutory exemption from the definition of “bank” under the Bank Holding Company Act (“BHC Act”). Congress did not explain the purpose of the 1987 exemption, but many have argued that the exemption allows commercial […]