Managing risks in european

Managing Risks in the European Periphery Debt Crisis Also by George Christodoulakis The Analytics of Risk Model Validation (edited with Stephen Satchell) Managing Risks in the European Periphery Debt Crisis Lessons from the Trade-Off between Economics, Politics and the Financial Markets Edited by George Christodoulakis Editorial matter and selection © George Christodoulakis 2015 Remaining chapters © Respective authors 2015 Softcover reprint of the hardcover 1st edition 2015 ISBN 978-1-137-30494-0 All rights reserved No reproduction, copy or transmission of this publication may be made without written permission No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988 First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010 Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN 978-1-349-45463-1 ISBN 978-1-137-30495-7 (eBook) DOI 10.1057/9781137304957 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin A catalogue record for this book is available from the British Library A catalog record for this book is available from the Library of Congress In the memory of my parents Aristotle and Georgia Christodoulakis, who taught me about qualities versus quantities This page intentionally left blank Contents List of Figures ix List of Tables xii Preface xiii Notes on Contributors xvii Part I: Genesis of the Crisis, Use and Abuse of Economic Policies The Genesis of the Eurozone Sovereign Debt Crisis Philippe d’Arvisenet The Trade-Off between Fiscal and Competitiveness Adjustments 38 Daniel Gros with Cinzia Alcidi Ireland and Greece: A Tale of Two Fiscal Adjustments 55 Jeffrey D Anderson and Jessica Stallings Rating Agencies vs Sovereign Debt Markets: A Tale of Interacting Risk Preferences 78 George Christodoulakis The 2012 Greek Debt Restructuring and its Aftermath 87 Miranda Xafa Economic Theories that Influenced the Judges of Karlsruhe 101 Paul De Grauwe Privatization of State Assets in the Presence of Crisis 108 George Christodoulakis Part II: Crisis Resolution, Prospect and Retrospect How to Manage Public Debts in the Euro Area? 127 Catherine Mathieu and Henri Sterdyniak Fiscal Risk Sharing and Stabilization in the EMU 148 Kerstin Bernoth and Philipp Engler 10 Sovereign Debt and its Restructuring Framework in the Eurozone 163 Ashoka Mody 11 Funding Risks for Corporates in the Periphery: Disintermediation to the Rescue for the Larger Ones, Challenges for the Others 198 vii viii 12 13 Contents Blaise Ganguin On Solving Europe’s Financial Issues to Promote Sustainable Growth 212 Adrian Blundell-Wignall and Caroline Roulet European Banking Union as a Response to the Fragmentation of the Internal Market Resulting from the Financial and Sovereign Debt Crisis 237 Dimitris Tsibanoulis with Gerry Kounadis Index 273 List of Figures 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 Exchange rates Exports of G & S, volume (index Q1/1991 = 100) Real three-month interbank rates, % Financial conditions in Germany Eurozone: credit to non financial corporate Eurozone: credit to households Debt of the private sector as % of GDP Domestic demand volume Goods and services balance, % of GDP Structural budget balance as % of GDP 10 Ten-year government bond yield, % 10 Real interest rate and external imbalances 11 Current account balance as % of GDP 11 Eurozone: five-year CDS by sector (basis points) 15 Eurozone trade (as % of total trade) 16 Eurozone: real growth dispersion 19 Eurozone: core inflation dispersion 19 Eurozone: output gap correlation among eurozone countries (eight-year rolling sample) 20 Structural budget balance as % of GDP 28 Current account balance as % of GDP 28 Exports of goods and services in volume, index qi/2000=100 29 Nominal unit labour cost, country vs Germany (index 2005=100) 29 Government debt as % of GDP: sovereign debt ratios not yet under control 40 ECB competitiveness indicator, unit labour cost, index, 1999Q1=100 41 GDP deflator, change between 1999 and 2012 (price index, 1999Q1=100) 43 Italy: selected governance indicators 52 Read GDP level 56 Ten-year government bond spreads vs German bund 56 Unemployment rate 57 Inward FDI, 2000–11 59 Employment 59 Fixed capital formation 60 Relative unit labour costs 61 Export volume 61 ix European Banking Union 261 Despite the fact that the policies introduced by the provisions of each Title are, in theory, legally equivalent, there are material differences in the character of the measures used to apply them and in their realization, in terms of their respective legal provisions, the means of achievement of their declared goals and, accordingly, their implementation While those provisions relating to the price-stability aspect of monetary policy have a specific and at least literally indisputable content, other provisions could be considered as simply blanket norms or programmatic declarations, to be defined and implemented at some future but indeterminate date when a fresh political initiative is taken These latter include the provisions establishing some of the Treaties’ fundamental principles which, from a legal policy point of view and given their hierarchical order, are equivalent to others on which a considerable amount of emphasis has been placed They are: a highly competitive social market economy (entailing undistorted functioning of the internal market); financial stability (entailing price stability and full employment); and social progress – all conditions favouring balanced economic growth Policies and fundamental principles established in the Treaties in the form of general clauses and indefinite legal terms often produce indeterminacy, and inevitably create the need to weigh values and interests against the fundamental principles inherent within those terms and their practical impact In accordance with such general principles to be coherently implemented by the determination of EU policies, the EMU needs to be overhauled by means of new formal rules to achieve not just better budgetary and economic surveillance and financial supervision, but also tools, such as those for banking resolution, enabling timely action to address and prevent systemic crisis The Treaties need mechanisms and tools to frame policies which will lead to real convergence and growth Happily, Europe has learned some hard lessons from the crisis and has introduced new institutions to defragment the internal market; and the European Commission is actively working in this direction,94 as demonstrated in addition by the rapid completion of the Banking Union framework However, without completing and enriching the necessary material remedies against crisis, the vicious circle of tight monetary and fiscal policy cannot be broken, and will lead to the disintegration of the euro Banking Union is a relevant step in the right direction Improvement of supervisory mechanisms, in itself, is, however, neutral in terms of meeting the convergence objective Therefore, mechanisms and tools to promote cohesion, growth and convergence are necessary supplements to Banking Union, since, on a realistic basis, recovery from the crisis is not possible in a fragmented EU market The first objective of the Banking Union, improving banking supervision, is complemented by the second, creating tools to address the crisis Taken together, these aims should form the basis of a safer, sounder, more balanced, transparent, accountable and responsible financial system, operating for the cohesion of the economy and society as a whole and capable of financing the real economy, a vital precondition for recovery and sustainable growth Risk, underpriced in the first ten years of EMU, should not during the current recession be overpriced by tight, one-sided monetary conditions that exacerbate the 262 Dimitris Tsibanoulis with Gerry Kounadis austerity programmes and retard growth This approach condemns the periphery to destitution, thereby increasing the likelihood of a euro disintegration.95 As a result, financial fragmentation will continue, with core countries facing easy monetary conditions, and periphery countries tight ones With monetary policy conducted on the basis of average market conditions, rising inflation in the core will mean tight monetary conditions that will further restrict the ability of the periphery to recover.96 Future instruments need to go beyond the simple detection of bubbles in the periphery; they also need to break the vicious circle of tight monetary and fiscal policy in the periphery, which ultimately constitutes a threat to the EMU Banking Union and the existing institutional framework need to be complemented by mechanisms and tools entailing specific material, substantive and procedural remedies against crisis, enabling the creation of policies for real convergence and growth More specifically, new mechanisms and genuine policy tools are needed, to address the expected risk of deflation and to enhance demand, in order to create growth, a prerequisite for full employment97 and, thus for financial stability98 and, consequently for a really functioning single market – an Economic and Monetary Union composed of about 330 million people and €10 tn GDP – serving the fundamental principles of the Treaties in a balanced way throughout the European Union Such policies should contribute to the overhaul of the EMU, in order to achieve a full economic, banking, fiscal and political union, while safeguarding the fundamental principles of the Treaties Developing a community of interests is the most promising solution for success, as it creates genuine growth prospects Without consistent implementation of reforms and without working in the aforementioned spirit, the vicious circle of tight monetary and fiscal policy cannot be broken, and fragmentation will continue to traumatize the internal market and create obstacles for growth and convergence, leading ultimately to the disintegration of the euro To this end, apart from necessary amendments to the Treaties – which will probably only come into being after long-lasting and complex political processes – a new “Financial Services Action Plan”, on the basis of the current EU legal framework, is needed to restore the internal market and pave the way for demand increase and conditions under which a financial and economic convergence can be realized Notes Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty, OJ L 178, 08.07.1988, pp 5–18 Second Council Directive 89/646/EEC of 15 December 1989 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions and amending Directive 77/780/EEC, OJ L 386, p 30.12.1989, pp 1–13 Second Council Directive 89/646/EEC on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions – Council Directive 89/299/EEC on the own funds of credit institutions – Council Directive European Banking Union 10 11 12 13 263 89/647/EEC on a solvency ratio for credit institutions – Council Directive 92/30/EEC on the supervision of credit institutions on a consolidated basis – Council Directive 92/121/EEC on the monitoring and control of large exposures of credit institutions Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field, OJ L 141, 11.6.1993, pp 27–46 This action plan follows on from the Communication of 28 October 1998 entitled “Financial services: building a framework for action” It was presented at the request of the European Council, meeting in Vienna in December 1998, which invited the Commission to draw up a programme of urgent work to achieve the objectives set out in the framework for action, on which a consensus had emerged It is also based on the discussions held within the Financial Services Policy Group (FSPG), composed of personal representatives of the finance ministers and the European Central Bank Originally developed in March 2001, the process is named after the Chair of the EU advisory committee that created it, Alexandre Lamfalussy, the first President of the European Monetary Institute (EMI) It consists of four levels, each focusing on a specific stage of the implementation of regulation See Tsibanoulis, Opening remarks: European Banking and Financial law in Times of Change, in: 25 years of Banking and Financial Law – General trends, AEDBF Conference held on 8–9.11.2013 in Athens, at: http://aedbf.eu/index.php?id=details&no_cache=1&L=1&tx_ ttnews[tt_news]=99&tx_ttnews[backPid]=22 European Council, The President, Towards a Genuine Economic and Monetary Union: Interim Report, Brussels, October 2012, p Avgouleas, Emilios and Arner, Douglas W (2013), The Eurozone Debt Crisis and the European Banking Union: A Cautionary Tale of Failure and Reform (1 October 2013) University of Hong Kong, Faculty of Law, Research Paper No 2013/037, p 18 Communication from the Commission on the application, from August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (“Banking Communication”), 2013/C 216/01, par 25 This “externality” can be regarded as being a case in point of “systemic risk” The definition given to systemic risk by the Financial Stability Board, International Monetary Fund and Bank for International Settlements in their joint Report to G-20 Finance Ministers and Central Bank Governors in October 2009 is worth mentioning: “a risk of disruption to financial services that is (i) caused by an impairment of all or parts of the financial system and (ii) has the potential to have serious negative consequences for the real economy Fundamental to this definition is the notion of negative externalities from a disruption or failure in a financial institution, market or instrument” See Financial Stability Board, International Monetary Fund and Bank for International Settlements, Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: Initial Considerations, report to the G-20 Finance Ministers and Central Bank Governors, October 2009, at: http://www.bis.org/publ/ othp07.pdf, p Karakitsos, in Iliadou/Karakitsos/Tsibanoulis, Greek National Report to Topic of FIDE’s XXVI Congress in Copenhagen (May 2014) “The Economic and Monetary Union: Constitutional and Institutional Aspects of the Economic Governance within the EU” The Court of Justice of the European Free Trade Association States’ (more commonly known as the EFTA Court) Judgment in Case E-16/11 – EFTA Surveillance Authority v Iceland, delivered in open court on 28 January 2013, is indicative of the problem of deposit guarantee schemes in Europe The EFTA Court was confronted with an action by the EFTA Surveillance Authority against Iceland The Authority claimed that Iceland had violated the transposed Directive and thus EEA law in the aftermath of its major economic crisis and collapse of the banking sector in 264 14 15 16 17 18 19 20 21 22 Dimitris Tsibanoulis with Gerry Kounadis 2008, by failing to ensure that British and Dutch depositors using the famous “Icesave” accounts offered by Icelandic banks received the minimum amount of compensation set out in Article 7(1) of the “Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes In a rather surprising decision, the Court interpreted the Directive very narrowly, effectively finding that Iceland had not failed to comply with its obligations under EEA law For the EFTA Court, the Directive is only made for bankruptcies of individual banks, and therefore it is a normal consequence of a systemic crisis that deposit-guarantee schemes fail in such situations, leaving the depositors unprotected Available at: http://www.eftacourt.int/ fileadmin/user_upload/Files/News/2013/16_11_Judgment.pdf Attinger, Crisis management and bank resolution, ECB-Legal Working Paper Series, No 13/2011 p 18, Avgouleas, Governance of Global Financial Markets, Cambridge University Press, 2012, p 11, 118 ss Directive 2001/24/EC of April 2001 on the reorganization and winding up of credit institutions (the “Credit Institutions’ Winding-up Directive”), OJ L 125, 5.5.2001, pp 15–23 The Directive addresses individual credit institutions with branches in the European Union, without dealing with cross-border banking groups, collective investment undertakings or investment firms Consequently, in a public consultation launched in May 2007 (Consultation of the Commission: The reorganisation and winding-up of credit Institutions 12.06.2007), and in a subsequent report released in November 2008 (Report from the Commission: ‘asset transferability’, 14.11.2008), the European Commission contemplated on whether the Directive reached its goals, whether it could apply to cross-border banking groups, and which was the proper way to overcome the obstacles associated with the transferability of assets within such groups See in detail Petrovic / Tutch, National rescue measures in response to the current financial crisis, in ECB-Legal Working Paper Series, No 8/ July 2009, and Attinger, Crisis management and bank resolution – Quo vadis Europe?, ECB-Legal Working Paper Series, 13/ 2011, p 20 ss See also BIS / Basel Committee on Banking Supervision, Resolution policies and frameworks – progress so far, July 2011 Communication from the Commission on the application, from August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (‘Banking Communication’), 2013/C 216/01, C 216/1, 30.7.2013 See Banking Communication 2013, par See in detail European Commission Staff Working Document, Impact Assessment Accompanying the document Proposal for a Directive of the European Parliament and of the Council establishing a framework for the recovery and resolution of credit institutions and investment firms, Attinger, Crisis management and bank resolution – Quo vadis Europe?, in ECB-Legal Working Paper Series, No 13/ December 2011, p 13 ss, Avgouleas, Governance of Global Financial Markets, Cambridge University Press, 2012, p 403 ss., Tsibanoulis Recovery and Resolution of Credit Institutions – Crisis Resolutions tools in the EU, in Revista de drept bancar şi financiar 2013/1, p 14 ss Proposal for a Directive of the European Parliament and of the Council establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directives 77/91/EEC and 82/891/EC, Directives 2001/24/EC, 2002/47/EC, 2004/25/ EC, 2005/56/EC, 2007/36/EC and 2011/35/EC and Regulation (EU) No 1093/2010 In March 2012, only 17 European banks were able to sell senior unsecured debt, the “Liikanen Report”, October 2012 p 10 The Fortis case is indicative: the company was broken up after having critical difficulty financing its part of a joint acquisition of ABN AMRO (as a member of a consortium which also included Royal Bank of Scotland Group and Banco Santander) After receiving a bailout from European Banking Union 23 22 23 24 25 26 27 28 29 30 31 265 the Benelux governments, its Belgian banking operations were sold to BNP Paribas, while its insurance and banking subsidiaries in the Netherlands were nationalised by the Dutch government and renamed ABN AMRO See Avgouleas, Governance of Global Financial Markets: The Law, the Economics, the Politics, 2012, pp 248 and 255 See Dirk Schoenmaker, Post-Crisis Reversal in Banking and Insurance Integration: An Empirical Survey, Economic Papers 496/April 2013, Avgouleas, Emilios and Arner, Douglas W., The Eurozone Debt Crisis and the European Banking Union: A Cautionary Tale of Failure and Reform (1 October 2013) University of Hong Kong, Faculty of Law, Research Paper No 2013/037 Available at SSRN: http://ssrn.com/abstract=2347937 or http://dx.doi.org/10.2139/ ssrn.2347937 The Fortis case is indicative: the company was broken up after having critical difficulty financing its part of a joint acquisition of ABN AMRO (as a member of a consortium which also included Royal Bank of Scotland Group and Banco Santander) After receiving a bailout from the Benelux governments, its Belgian banking operations were sold to BNP Paribas, while its insurance and banking subsidiaries in the Netherlands were nationalised by the Dutch government and renamed ABN AMRO See Avgouleas, Governance of Global Financial Markets: The Law, the Economics, the Politics, 2012, pp 248 and 255 See Dirk Schoenmaker, Post-Crisis Reversal in Banking and Insurance Integration: An Empirical Survey, Economic Papers 496/April 2013, Avgouleas, Emilios and Arner, Douglas W., The Eurozone Debt Crisis and the European Banking Union: A Cautionary Tale of Failure and Reform (1 October 2013) University of Hong Kong, Faculty of Law, Research Paper No 2013/037 Available at SSRN: http://ssrn.com/abstract=2347937 or http://dx.doi.org/10.2139/ ssrn.2347937 See Avgouleas, Governance of Global Financial Markets: The Law, the Economics, the Politics, 2012, pp 9–10, Gortsos, The ‘single supervisory mechanism’: a major building-block towards a European Banking Union, 2013, Kuenzel/Ruscher, The Future of EMU, ECFIN April 2013, pp 3–4 Schoenmaker, An Integrated Financial Framework for the Banking Union: Don’t Forget Macro-Prudential Supervision, Economic Papers 495/April 2013, p 16 See in detail Athanassiou, Withdrawal and Expulsion from the EU and EMU, ECB-Legal Working Paper Series, No 10 / December 2009 Tsibanoulis, The registered seat as inherent discriminatory factor in the internal market: as to the deposits’ attractiveness for banks and the financing ability for firms, in AEDBF Conference held on 8–9.11.2013 in Athens, at: http://aedbf.eu/index.php?id=details&no_ cache=1&L=1&tx_ttnews[tt_news]=99&tx_ttnews[backPid]=22 Battistini, Niccolò/Pagano, Marco/Simonelli, Saverio Systemic Risk and Home Bias in the Euro Area, Economic Papers 494/April 2013, Schoenmaker, Dirk, An Integrated Financial Framework for the Banking Union: Don’t Forget Macro-Prudential Supervision, Economic Papers 495/April 2013 See Bloomberg Editorial Board, ‘Hey, Germany: You Got a Bailout, Too’, 23 May 2012, at: http://www.bloombergview.com/articles/2012-05-23/merkel-should-know-her-country-hasbeen-bailed-out-too See Eric Toussaint, The Euro Crisis, Contradictions between Countries in the Periphery and Centre of the European Union, Global Research, November 26, 2013, at: http://www globalresearch.ca/the-euro-crisis-contradictions-between-countries-in-the-periphery-andcentre-of-the-european-union/5359408 Battistini, Niccolò/Pagano, Marco/Simonelli, Saverio Systemic Risk and Home Bias in the Euro Area, Economic Papers 494/April 2013, Robert Kuenzel and Eric Ruscher, The Future of EMU, ECFIN, April 2013 266 Dimitris Tsibanoulis with Gerry Kounadis 32 Euro area summit on 29 June 2012, available at: http://www.european-council.europa.eu/ home-page/highlights/euro-area-summit-statement?lang=en 33 See Arestis/Karakitsos, Financial Stability in the Aftermath of the Great Recession (2013), p 140 ss See also Santi, Chroniques d’un fiasco économique et politique p 140 ss 34 See Arestis / Karakitsos (2013), Financial Stability in the Aftermath of the Great Recession, p 148 35 Meanwhile, the EFSF and EFSM will continue to handle money transfers and programme monitoring for the previously approved bailout loans to Ireland, Portugal and Greece 36 The Treaty Establishing the ESM was originally signed by finance ministers of the 17 euro area countries on 11 July 2011 However, a modified version of the Treaty, incorporating amendments aimed at improving the effectiveness of the mechanism, was signed in Brussels on February 2012 The ESM Treaty entered into force on 27 September 2012, and the European Stability Mechanism was inaugurated on October 2012 following ratification by all (then) 17 euro area member states An amended version of the Treaty upon the accession of Latvia to the ESM entered into force on 13 March 2014 (http://www.esm.europa.eu/) 37 Such an amendment allowed, via an international agreement, the creation of a permanent financing mechanism to act as a permanent source of financial assistance for member states in financial difficulties, giving rise to new bail-outs of Eurozone member states 38 The Court of Justice of the EU in its Pringle Decision of 27 November 2012 (Case C-370/12) judged that Articles 4(3) TEU and 13 TEU, Articles 2(3) TFEU, 3(1)(c) and (2) TFEU, 119 TFEU to 123 TFEU and 125 TFEU to 127 TFEU, and the general principle of effective judicial protection not preclude the conclusion between the Member States whose currency is the euro of an agreement such as the Treaty between EU Member States establishing the European stability mechanism concluded at Brussels on February 2012 (the “ESM Treaty”) or the ratification of that treaty by those Member States 39 Judgment of 27.11.2012 in Case C-370/12, Thomas Pringle v Government of Ireland, http://curia.europa.eu/jcms/upload/docs/application/pdf/2012-11/cp120154en.pdf See also Pieter-Augustijn Van Malleghem, Pringle: A Paradigm Shift in the European Union’s Monetary Constitution, Special Section: the ESM before the Courts, in: German Law Journal, Vol 14 No 01 2013, pp 141–168, at: http://www.germanlawjournal.com/pdfs/Vol14-No1/ PDF_Vol_14_No_1_141-168_ESM%20Special_van%20Malleghem.pdf 40 The Court held that the challenged amendment does not encroach on the exclusive competence held by the EU (Part One of the TFEU) in the area of monetary policy for the Member States whose currency is the euro According to the Court, while the primary objective of the EU’s monetary policy is to maintain price stability, the ESM pursues an objective which is clearly distinct, namely to safeguard the stability of the Eurozone as a whole This economic policy measure cannot be treated as equivalent to a monetary policy measure reserved for the ECB, for the sole reason that it may have indirect effects on the stability of the common currency Further, the instruments envisaged in order to attain the objective pursued by the ESM, the provision of financial assistance to a Member State, clearly not fall within monetary policy 41 Judgment of 27.11.2012 in Case C-370/12, Thomas Pringle v Government of Ireland (footnote 39) 42 OJ C 83, 30.3.2010, pp 47–199 43 Protocol No TEU and TFEU, OJ C 83, 30.3.2010, pp 230–250 44 For criticism with respect to the absence of primary law, see Kämmerer/Starski, Die Europäische Zentralbank in der Bankenunion, ZG 2013, p 318 ss (338) 45 See Gortsos, The “single supervisory mechanism”, p 46 The High-Level Group on Financial Supervision in the EU Report, Brussels, 25 February 2009, at: http://ec.europa.eu/commission_barroso/president/pdf/statement_ 20090225_ en.pdf European Banking Union 267 47 Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (ESRB), OJ L 331/1, 15.12.2010, pp 1–11 48 Council Regulation (EU) No 1096/2010 of 17 November 2010 conferring specific tasks upon the European Central Bank concerning the functioning of the European Systemic Risk Board, OJ L 331, 15.12.2010, p 162 See in detail Głuch/Škovranová/Stenström, Central bank involvement in Macro-prudential oversight, in ECB-Legal Working Paper Series, No 14/ January 2013.p ss 49 Regulation (EU) No 1093/2010 of the European Parliament and of the Council establishing a European Banking Authority (EBA), L 331, 15.12.2010, p 12 50 Regulation (EU) No 1095/2010 of the European Parliament and of the Council establishing a European Securities and Markets Authority (ESMA), OJ L 331, 15.12.2010, p 84 51 Regulation (EU) No 1094/2010 of the European Parliament and of the Council establishing a European Insurance and Occupational Pensions Authority (EIOPA), OJ L 331, 15.12.2010, p 48 52 The ESAs will not have general authority directly to supervise financial institutions or markets, apart from certain specific powers of ESMA (If EU member states declare a state of crisis in their forum, the European Council, ESMA, will have additional powers to impose rules that would normally be restricted to national regulators, for example imposing a pan-European ban on short selling.) Nevertheless, the ESAs will be entrusted with taking decisions which are directly applicable on individual financial institutions in cases where they either manifest breach or non-application of EU law by a national regulator or disagreement between the national regulators Where a national regulator does not abide by any such decision, the relevant ESA may address a financial institution directly See also C Gortsos, The single supervisory mechanism, p 53 See Tommasso Padoa-Schioppa, Regulating Finance: Balancing Freedom and Risk, Oxford University Press, Oxford 2004, p 121 54 See Luis Garicano and Rosa Lastra, Towards a New Architecture for Financial Stability: Seven Principles, CEP Discussion Paper No 990, July 2010 55 Binder, ZBB, 298, 301 56 Euro Area Summit Statement, 29 June 2012, first paragraph, fourth sentence 57 Joint Statement of the Ministers of Finance of Germany, the Netherlands and Finland, 25 September 2012 58 In February 2012, the Commission established a High-level Expert Group to examine possible reforms to the structure of the EU’s banking sector In agreement with President Barroso, Commissioner Barnier appointed Erkki Liikanen – Governor of the Bank of Finland and a former member of the European Commission – as the chairman The Group started its work in February 2012 and presented its final report to the Commission on October 2012 The report of the European Commission’s High-level Expert Group on Bank Structural Reform (the Liikanen Report) proposed a number of structural reforms, pursuing a significant change in the banking landscape in EU Among others, the proposed mandatory ring-fencing mechanism, entailing the separation of retail banking from trading / investment activities, signals a return to traditional banking culture The reform’s proposal aims, inter alia, to reduce risk arising from the mixing of two different banking management cultures Banks will become simpler in structure and therefore easier to monitor Risk should be reduced by easing banks’ complexity and tackling interconnectedness In this regard, corporate governance of banking institutions will be simpler and more focused, to give a more feasible and coherent working environment Thus, a more coherent corporate governance paradigm should be achieved, free from the anomalies and conflicts of interest endemic to controversial and opposing banking 268 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 Dimitris Tsibanoulis with Gerry Kounadis objectives As a result of such separation, funding has more chances to flow to the real economy, to support economic activity and enhance growth See High-level Expert Group on reforming the structure of the EU banking sector, at: http://ec.europa.eu/internal_market/ bank/docs/high-level_expert_group/report_en.pdf Binder, ZBB 2013, 299–301 Binder, ZBB, 302, Gortsos, The “single supervisory mechanism”: a major building-block towards a European Banking Union (the full europeanisation of the “bank safety net”), p Council Regulation (EU) No 1024/2013 of 15 October 2013, conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions Regulation (EU) No 1022/2013 of the European Parliament and of the Council of 22 October 2013 amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards the conferral of specific tasks on the European Central Bank pursuant to Council Regulation (EU) No 1024/2013 https://www.ecb.europa.eu/ssm/html/index.en.html See Council Regulation No 1024/2013, recitals 10 and 12 On the new ECB supervisory tasks, see in detail Kämmerer, Bahn frei der Bankenunion? Die neuen Aufsichtsbefugnisse der EZB im Lichte der Ell-Kompetenzordnung, NVwZ 13/2013, 830 ss If the ECB agrees, the decision will be published in the Official Journal of the EU http://www.ecb.europa.eu/ssm/html/index.en.html See Gortsos, The “single supervisory mechanism”, p 26 See Gortsos, The “single supervisory mechanism”, p 35 For risks associated with the taking over by the ECB, as a monetary authority, of supervisory tasks, see Kämmerer, Bahn frei der Bankenunion? Die neuen Aufsichtsbefugnisse der EZB im Lichte der EU-Kompetenzordnung, NVwZ 13/2013, p 830 ss., and Kämmerer/Starski, Die Europäische Zentralbank in der Bankenunion, ZG 2013, p 318 ss., and See Binder, ZBB 302–303 Banking Communication, para See Banking Communication, para Ibid, para New crisis management measures to avoid future bank bail-outs, Brussels, June 2012, available at: http://europa.eu/rapid/press-release_IP-12-570_en.htm?locale=en For an extensive analysis on bail-in mechanisms in relation to recapitalisation and state aid see Banking Communication, par Regarding the interconnection between national resolution, driven by national financial supervisors, and fragmentation, see Dirk Schoenmaker, Post-Crisis Reversal in Banking and Insurance Integration: An Empirical Survey, Economic Papers 496/April 2013 See Binder, ZBB 2013, 305 Proposal for a Regulation of the European Parliament and of the Council, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Bank Resolution Fund, and amending Regulation (EU) No 1093/2010 of the European Parliament and of the Council Proposal for a Directive of the European Parliament and of the Council, establishing a framework for the recovery and resolution of credit institutions and investment firms, and amending Council Directives 77/91/EEC and 82/891/EC, Directives 2001/24/EC, 2002/47/ EC, 2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EC and Regulation (EU) No 1093/2010 European Banking Union 269 80 Proposal for a Directive of the European Parliament and of the Council amending Directive 94/19/EC on Deposit Guarantee Schemes as regards the coverage level and the payout delay 81 Dirk Schoenmaker, Post-Crisis Reversal in Banking and Insurance Integration: An Empirical Survey, Economic Papers 496/April 2013 82 On the primacy of price stability and the ECB role in the Banking Union see Kämmerer// Starski, Die Europäische Zentralbank in der Bankenunion oder: Vor Risiken und Nebenwirkungen wird gewarnt, ZG 2013, 330 83 Arestis/Karakitsos, p 168 84 The very basic difference between the ECB and the Fed, for instance, is not to be found in each bank’s mandate but chiefly in their institutional framework The Fed has been characterised as the “fourth branch of government” in the USA, particularly following the unprecedented actions taken during the 2008 financial crisis (the total amount of loans to the banking sector has been estimated to be close to $8 tn) Its competences, though, have been conferred upon the Fed by virtue of an act (Federal Reserve Act), which can be amended by the Congress – unlike the TFEU, which requires consensus from member states in case of amendment The US Constitution in itself has conferred upon Congress the power “to coin money” and “regulate the value thereof “ (Article 1) While Congress has delegated this duty to the Fed, Congress is nevertheless entitled, at least in theory, to revoke it Not only is the Fed’s flexibility greater, but so too is its dependence on the government 85 See Bloomberg Editorial Board, ‘Hey, Germany: You Got a Bailout, Too’, 23 May 2012, at: http://www.bloombergview.com/articles/2012-05-23/merkel-should-know-her-country-hasbeen-bailed-out-too 86 See on this Arestis / Karakitsos, p 147 87 In that respect, it has been convincingly argued by Ph Athanassiou (“Of Past Measures and Future Plans for Europe’s Exit from the Sovereign Debt Crisis: What is Legally Possible (and What is Not)”, European Law Review 2011, 558) that the measures taken (till then) conformed with the EU treaties and especially that “(1) art 125 TFEU is compatible with the extension of Union or Member State temporary financial assistance to Euro area Member States in difficulty; (2) art 122(2) TFEU was an adequate and sufficient legal basis for the adoption of Council Regulation 407/2010, establishing the European Financial Stabilisation Mechanism, and for the extension of Union financial assistance to Member States in difficulty; (3) the Securities Markets Programme is consistent with the rationale and objectives of the monetary financing prohibition and purchases conducted under it not circumvent art.123 TFEU; (4) a Treaty amendment was indispensable to establish a Euro area support fund and the choice of art.136 TFEU was appropriate also for clarifying the scope of art.125 TFEU.” 88 Binder, ZBB 2013, 302 89 Shoenmaker, An Integrated Financial Framework for the Banking Union: Don’t Forget MacroPrudential Supervision, Economic Papers 495/April 2013, remarks that the fragmentation between the financial systems of euro area member states complicates the conduct of a single monetary policy within the EMU 90 Binder, ZBB 2013, 303 91 See the Pringle Decision of the European Court of Justice (Case C-370/12), footnote 39 92 See F S Mishkin, The Economics of Money, Banking and Financial Markets, 9th Edition, The Addison-Wesley series in economics, Boston et al, 2009, p 25 93 Karakitsos, in Iliadou/Karakitsos/Tsibanoulis, Greek National Report to Topic of FIDE’s XXVI Congress in Copenhagen (May 2014) “The Economic and Monetary Union: Constitutional and Institutional Aspects of the Economic Governance within the EU” See also Santi, Chroniques d’un fiasco économique et politique, p 102 270 Dimitris Tsibanoulis with Gerry Kounadis 94 See European Commission’s Note, A comprehensive EU response to the financial crisis: substantial progress towards a strong financial framework for Europe and a banking union for the eurozone, Brussels, 28 March 2014 95 Karakitsos, in Iliadou/Karakitsos/Tsibanoulis, Greek National Report to Topic of FIDE’s XXVI Congress in Copenhagen (May 2014) “The Economic and Monetary Union: Constitutional and Institutional Aspects of the Economic Governance within the EU” 96 Karakitsos, in Iliadou/Karakitsos/Tsibanoulis, Greek National Report to Topic of FIDE’s XXVI Congress in Copenhagen (May 2014) “The Economic and Monetary Union: Constitutional and Institutional Aspects of the Economic Governance within the EU” 97 Regarding new ideas concerning equitable growth in the EU and the achievement of the Europe 2020 target for social inclusion, see Atkinson, A.B., Ensuring social inclusion in changing labour and capital markets, Economic Papers 481/April 2013 98 Arestis/Karakitsos, p 186 Bibliography Arestis, P and E Karakitsos (2013), Financial Stability in the Aftermath of the Great Recession, Palgrave Macmillan, London and New York Athanassiou, P (2011), Of Past Measures and Future Plans for Europe’s Exit from the Sovereign Debt Crisis: What is Legally Possible (and What is Not), European Law Review, 558 Athanassiou, P (2009), Withdrawal and Expulsion from the EU and EMU – Some Reflections, in ECB-Legal Working Paper Series, No 10 / December 2009 Atkinson, A B (2013), Ensuring Social Inclusion in Changing Labour and Capital Markets, Economic Papers 481/April 2013 Attinger, B J (2011), Crisis Management and Bank Resolution – Quo vadis Europe?, in ECB-Legal Working Paper Series, No 13/ December 2011 Avgouleas, E (2012), Governance of Global Financial Markets, Cambridge University Press, Cambridge, UK Avgouleas, E and D W Arner (2013), The Eurozone Debt Crisis and the European Banking Union: A Cautionary Tale of Failure and Reform (1 October 2013) University of Hong Kong, Faculty of Law, Research Paper No 2013/037 Battistini, Niccolò/Pagano, Marco/Simonelli, Saverio Systemic Risk and Home Bias in the Euro Area, Economic Papers 494/April 2013 Binder, J.-H., Auf dem Weg zu einer europäischen Bankenunion? Erreichtes, Unerreichtes, offene Fragen, ZBB 2013, 297–312 BIS/Basel Committee on Banking Supervision, Resolution policies and frameworks – progress so far, July 2011 Bloomberg Editorial Board, ‘Hey, Germany: You Got a Bailout, Too’, 23 May 2012, available at: http://www.bloombergview.com/articles/2012-05-23/merkel-should-know-her-country-hasbeen-bailed-out-too Communication from the Commission on the application, from August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (‘Banking Communication’), 2013/C 216/01 European Commission, A comprehensive EU response to the financial crisis: substantial progress towards a strong financial framework for Europe and a banking union for the eurozone, Brussels, 28 March 2014, http://europa.eu/rapid/press-release_MEMO-10-434_en.htm Financial Stability Board, International Monetary Fund and Bank for International Settlements, Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: European Banking Union 271 Initial Considerations, report to the G-20 Finance Ministers and Central Bank Governors, October 2009, at: http://www.bis.org/publ/othp07.pdf Garicano, L and R Lastra (2010), Towards a New Architecture for Financial Stability: Seven Principles, CEP Discussion Paper No 990, July 2010 Głuch, Daniel/ Škovranová, Lucia/ Stenström, Mikael, Central bank involvement in Macroprudential oversight, in ECB-Legal Working Paper Series, No 14/ January 2013 Gortsos, C (2013), The ‘Single Supervisory Mechanism’: A Major Building-Block towards a European Banking Union (the full europeanisation of the ‘bank safety net’), Paper presented at the 2nd Annual Research Conference of the IADI, Basel, April 2013 [The] High-Level Group on Financial Supervision in the EU Report, Brussels, 25 February 2009, available at: http://ec.europa.eu/commission_barroso/president/pdf/statement_ 20090225_ en.pdf Iliadou/Karakitsos/Tsibanoulis, Greek National Report on Topic of FIDE’s XXVI Congress in Copenhagen (May 2014) “The Economic and Monetary Union: Constitutional and Institutional Aspects of the Economic Governance within the EU” (2014) Kämmerer, Jörn Axel, Bahn frei der Bankenunion? Die neuen Aufsichtsbefugnisse der EZB im Lichte der EU-Kompetenzordnung, NVwZ 13/2013, 830–836 Kämmerer, Jörn Axel/ Starski, Paulina, Die Europäische Zentralbank in der Bankenunion oder: Vor Risiken und Nebenwirkungen wird gewarnt, ZG 2013, 318–338 Kuenzel, R and E Ruscher (2013), The Future of EMU, ECFIN, Economic brief, Issue 22/April 2013 van Malleghem, P and P Augustijn (2013), A Paradigm Shift in the European Union’s Monetary Constitution, Special Section: the ESM before the Courts, German Law Journal, 14(1), 141–68, available at: http://www.germanlawjournal.com/pdfs/Vol14-No1/PDF_Vol_14_No_1_141168_ESM%20Special_van%20Malleghem.pdf Mishkin, F S (2009), The Economics of Money, Banking and Financial Markets, 9th Edition, The Addison-Wesley series in economics, Boston et al Padoa-Schioppa, T (2004), Regulating Finance: Balancing Freedom and Risk, Oxford University Press, Oxford, UK Petrovic, A and R Tutsch (2009), National rescue measures in response to the current financial crisis, in ECB-Legal Working Paper Series, No 8/ July 2009 [The] Report of the European Commission’s High-level Expert Group on Bank Structural Reform (“Liikanen report”) proposed a number of structural reforms, pursuing a significant change in the banking landscape in EU, at: http://ec.europa.eu/internal_market/bank/docs/highlevel_expert_group/report_en.pdf Santi, Michel, L’Europe: Chroniques d’un fiasco économique et politique, L’Harmattan, 2013 Schoenmaker, D (2013), An Integrated Financial Framework for the Banking Union: Don’t Forget Macro-Prudential Supervision, Economic Papers 495/April 2013 Schoenmaker, D (2013) Post-Crisis Reversal in Banking and Insurance Integration: An Empirical Survey, Economic Papers 496/April 2013 Toussaint, E (2013), The Euro Crisis, Contradictions between Countries in the Periphery and Centre of the European Union, Global Research, November 26, 2013, available at: http://www globalresearch.ca/the-euro-crisis-contradictions-between-countries-in-the-periphery-andcentre-of-the-european-union/5359408 Tsibanoulis, D (2013), Recovery and Resolution of Credit Institutions – Crisis Resolutions tools in the EU, in Revista de drept bancar şi financiar 2013/1, p 14 Tsibanoulis, D (2013), Opening remarks: European Banking and Financial law in Times of Change, in: 25 years of Banking and Financial Law – General trends, AEDBF Conference held on 8–9.11.2013 in Athens, available at: http://aedbf.eu/index.php?id=details&no_ cache=1&L=1&tx_ttnews[tt_news]=99&tx_ttnews[backPid]=22 272 Dimitris Tsibanoulis with Gerry Kounadis Tsibanoulis, The registered seat as inherent discriminatory factor in the internal market: as to the deposits’ attractiveness for banks and the financing ability for firms, in AEDBF Conference held on 8–9.11.2013 in Athens, available at: http://aedbf.eu/index.php?id=details&no_ cache=1&L=1&tx_ttnews[tt_news]=99&tx_ttnews[backPid]=22 Index austerity, 246, 248, 259, 265, 267, 269 bail-in, 260–261, 267 Banking Union Banking Recovery and Resolution Directive, 242, 260–262 single deposit guarantee scheme, 256, 262–263 Single Resolution Fund, 261–263 Single Resolution Mechanism, 259–264 Single Supervisory Mechanism, 254–259 Basel III, 199 bond markets, 55 bond spread, 14, 16, 79, 81, 85, 182 business insolvencies, 202, 203f CDS, 15, 78–86, 94, 214, 217, 218, 222, 223–228 CDS spread, 81, 81, 86, 222, 223 Collective Action Clauses (CACs), 93 comparative advantage, competitiveness, 6, 12, 16, 22–31, 38–60, 102, 129–161, 215, 229, 246, 248, 266 convergence, conversion risk, 13 corporate financial performance, 200f, 201f, 202f corporate funding, 198, 199f, 204–206 corporate bond market, 198–199, 206–208 corporate defaults, 202, 203f Court of Justice, 250 credit default swap, 78, 190, 191 credit rating, 78, 79, 85, 90, 198, 204, 206, 214, 223 corporate uses, 204–206 CSR (Country Specific Recommendations), 38, 39, 49, 50–54 debt buyback, 95, 97 debt crisis, 3, 55, 78, 79, 83, 85, 87–101, 106, 108–164–186, 236–266 debt dynamics, 14 default risk, 13 deflation, 5, 20, 54 de Larosière Report, 252, 254 demand shock, 17 deposit guarantee scheme, 241 disintermediation, 199f, 206–208 ECB, 5, 33, 63, 79, 90, 94, 99, 101–109, 136–147, 156, 175–180, 214–235, 246–270 easing, 63 funding, 63 repayments to, 63 endogenous divergence, 24 ESM, 62 EU structural funds, 64 European Central Bank monetary authority, 252, 253, 264–267 supervisory authority, 255–259, 262 European Financial Stability Facility, 90, 93, 249, 257, 261 European Monetary System, European Stability Mechanism, 249, 251 European Supervisory Authorities, 252–253 Eurostat, 57 Exceptional Liquidity Assistance, 63, 94 expansionary budget adjustment, 30 fiscal adjustment, 32, 49, 55 fiscal effort, 14 fiscal multiplier, 62–63, 64 fiscal policy, 25, 26, 33, 35, 148 fragmentation, 238, 245–251, 260, 261, 266, 269, 270 273 274 Index governance, 25, 38, 53, 133, 134, 138, 141, 145, 147, 210, 240–269 Greece access to credit, 60 bank recapitalization, 57–58, 62 central bank, 63 consolidation measures, 64, 67, 71–77 EU-IMF programme, 57, 64 competitiveness, 60 See also relative unit labour costs deficit targets, 64 employment, 58, 59 exports, 60, 61, 62, 63 fiscal adjustment, 55, 62, 63, 65 fiscal consolidation, 63, 64, 67 See also fiscal adjustment and consolidation measures fiscal targets, 64 See also programme targets foreign direct investment (FDI), 58, 59 growth, 55, 56, 58, 62, 64, 65 See also real GDP market access, 55 output contraction, 58 output gap, 62, 63 primary fiscal deficit, 62 privatization, 64 product market liberalization, 64 programme targets, 64 public investment in, 64 real GDP, 56, 62, 63, 64, 66, 67 relative unit labour costs, 60–61 tourism, 60 unemployment, 55, 57, 62 Greek debt restructuring, 87–97 Greek government debt, 56, 57, 58 buyback (December 2012), 55, 57 exchange (March 2012), 55, 57 ratio, to GDP, 55, 57, 58, 63, 64, 65, 67 sustainability, 55 Greek loan package, 90 growth, 245–249, 259, 260, 264–270 holdout creditors, 94 imbalances, institutional gaps, 239–244, 245, 247, 264, 267 lacunae, 265, 267 loopholes, 236 internal market, 236–238, 239, 241, 246, 255, 263, 267, 269 Ireland bank recapitalization, 57–58 consolidation measures, 63, 64, 65, 67, 68–71 corporate income tax rate, 58 EU-IMF programme, 55, 63 bond issuance, 55 bond issues, 64 competitiveness, 60 See also relative unit labour costs deficit, 56, 57, 63, 64 employment, 58, 59 exports, 60, 61, 63 fiscal adjustment, 64 fiscal consolidation, 55, 63, 64, 67 See also fiscal adjustment and consolidation measures fiscal targets, 58 See also programme targets foreign direct investment (FDI), 58, 59, 60 growth, 55, 56, 58, 62, 64 See also real GDP mortgage debt, 63 output gap, 62, 63 programme targets, 56, 64 real GDP, 56, 61, 63, 66, 67 relative unit labour costs, 60–61 unemployment, 57 Irish government debt, 56, 57, 58, 64 ratio, to GDP, 57, 63, 64, 67 sustainability, 55 labour, 58 Liikanen Report, 251, 255 liquidity risk, 13 market regulations, 21 Mundell R, 17 North-South divide, 23 official sector involvement (OSI), 95, 97 Index Optimum Currency Area, 15 Outright Monetary Transactions (OMT), 99 pessimism, 78, 79, 81, 83–85 political economy, 79, 109, 267 Private Sector Involvement (PSI), 90, 93–95, 98 privatization, 64, 76, 92, 108–123 asset classes, 115–117, 120 banks, 115 concession agreement, 108, 109, 113, 114 defense industries, 116 France, 111 gambling, 115 Greece, 113 Germany, 110 Initial Public Offering (IPO), 108, 113 Inter-ministerial Committee for Asset Restructuring and Privatization, 114 Ireland, 112 Italy, 111 performance, 120–122 political economy, 109 portfolio, 120–122 Portugal, 112 privatization plan, 108, 109, 111–115, 119, 120 real estate, 117 risk premium, 121 Secondary Public Offering (SPO), 108, 113 Spain, 112 275 state rights, 117 strategic investor, 113, 116, 117 telecoms, 116 transport, 115 state assets, 108, 109, 111–115, 117, 121 State Secretariat for Asset Restructuring and Privatization, 114 water supply, 116 procyclicality, 25 propagation, 78, 79, 83–85 rating agencies, 78, 81–85 real devaluation, 27 risk preferences, 78 Securities Market Program, 90, 94, 99 small and medium size companies, 208–209 snake, Solvency II, 199 sovereign debt market, 13, 78–85 sudden stops, 3, 12 supply shock, 17 Tradables, Treaty on European Union (TEU), 250, 267 Treaty on the Functioning of the European Union (TFEU), 248–250, 264, 267 vicious circle between monetary and fiscal policy, 268–269 between sovereigns and banks, 245, 247–250 .. .Managing Risks in the European Periphery Debt Crisis Also by George Christodoulakis The Analytics of Risk Model Validation (edited with Stephen Satchell) Managing Risks in the European. .. focusing on key issues arising from the eurozone crisis, including implications for banks and impediments to financing for small businesses in Europe He was Director of the Institute’s European. .. (LLM) in Finance at the Institute for Law and Finance (ILF) of Goethe University Frankfurt with a first class LLM thesis (“Evolving International and European Regulatory Regimes for Netting in Financial