States and markets : regulatory competition and the public law of banks

Abstract

One of the most immediate questions that could be raised is that of the topic. Why banks?. Banks are a part of the economy which is especially prone to regulatory competition. Increasing financial globalization makes it difficult to maintain regulatory barriers and those remaining create costs that are avoided by regulatory arbitrage. Banks’ raw material is capital which is a highly mobile element. On the top of that, the longstanding experience of the US in the field, should be of some usefulness. Finally, banks are attractive since the European Union, by means of the Second Banking Directive, has undertaken a decisive step towards liberalisation. Regulatory competition in this field will be able to give us some clues into the direction of services regulation in general, and into the new institutional dimension of the Union. However, banks are only one type of financial actors. Securities and insurance industry are gradually occupying spaces traditionally reserved to banks - namely deposit collection and lending - and conversely, banks are extending their product range to cover securities and insurance activities, and are experiencing a process of disintermediation. Hence, it is increasingly impossible to distinguish among financial actors. Concentrating in one of them is just a research need in order to keep the study under manageable dimension. Still, banks remain a legally different industry because of their position in the economic gear and in the payment system. What could actually be questioned is the future of banks themselves or at least their different legal treatment In any case, the topic of financial services regulation is too large to be covered as a whole, so some subdivision is necessary. This has to be done acknowledging that divisions may not correspond to the reality of the marketplace.