André Prüm

Ignorance, Debt and Cryptocurrencies: The Old and the New in the Law and Economics of Concurrent Currencies

Cryptocurrencies are expected to have a significant impact on banking, finance, and monetary systems. Due to uncertainty as to the possible future trajectories of the evolving cryptocurrency ecosystem, governments have taken a relatively hands-off approach to regulating such currencies. This approach may be justified within the theoretical information-economics framework of this paper, which draws parallels between the information economics of money and quasi-money creation within the current central banking, commercial banking and shadow banking systems with that of the cryptocurrency ecosystem. In particular, drawing lessons from the literature on the role of information in creating ‘safe assets’, this paper finds that by building on symmetric (common) knowledge as to the inner workings of the Bitcoin Blockchain - though in a different way - bitcoin possesses a degree of endogenous information insensitivity typical of safe assets. This endogenous information insensitivity could support bitcoin’s promise of maturing into a viable store of value and a niche medium of exchange. This finding should not be overlooked in the policy discussions for potential future regulatory interventions in the cryptocurrency ecosystem.

Brexit: Options for Banks from the UK to Access the EU Market

UK banks who want to maintain an access to the EU market after BREXIT are currently assessing their options. The prospect of a free trade agreement with the EU remaining uncertain, they cannot rely on such an agreement before taken a decision. The present paper sketches the three main options – i.e. servicing EU client directly from the UK, creating a branch or establishing a subsidiary – comparing their benefits and restrictions under the GATS rules and the free movement of capital and freedom of establishment under the EU Treaties. The focus is on traditional banking activities leaving aside investment services. Whilst acting through a EU based subsidiary appears to be the most promising option for UK banks who ambition to serve clients on a EU scale, the choice of location is not trivial as Member States are competing to attract such subsidiaries to their jurisdiction. The ECB in its supervisory role of the banking sector has already signaled that it will not allow such competition to result in a supervisory arbitrage.

Shadow Banking in Europe: Idiosyncrasies and Their Implications for Financial Regulation

This paper studies the specificities of the regulation of shadow banking in the EU. It argues that the idiosyncratic features of the EU shadow banking sector call for a different (or indigenized) regulatory approach from that of the U.S. It highlights striking differences between the EU and the U.S. shadow banking sector based on both the market structure and the legal micro-infrastructure of the shadow banking sector in these two jurisdictions. These different institutional and legal infrastructures of the shadow banking activities, instruments, and entities, as well as the different trajectories of the evolution of development of the banking and the shadow banking sectors in terms of business models, size and composition of actors and transactions can be the driving force behind the differential regulatory treatment of shadow banking in the EU and the U.S. In highlighting the differences between shadow banking in the EU and the U.S., this paper focuses on the repo markets, securitization and derivatives markets as the main instruments and activities that play significant roles in credit intermediation (maturity and liquidity transformation) outside the regulatory perimeter of the traditional/regular banking system. It then discusses shadow banking entities, especially Money Market Funds (MMFs) as typical shadow banking entities and highlights the fundamental differences in the structure and functioning and existing regulatory treatment of the MMFs in the U.S. and the EU. In the end, the paper underscores the main structural and regulatory differences in the Alternative Investment Fund (AIF) industry across the Atlantic and argues that there is no homogeneous population of such funds and why they need to be treated differentially. The paper concludes that the market structure, business models, as well as legacy regulatory framework of shadow banking (as well as banking), display substantial differences in the U.S. and the EU. The findings in this paper rally against one-size-fits-all proposals to address the problems of the shadow banking system worldwide and require considerably differentiated regulatory approaches to regulating shadow banking across the Atlantic. Therefore, any adoption of the U.S. regulatory framework for the shadow banking sector by the authorities regulating the European shadow banking sector should be cautiously undertaken.

La transplantation de la société par actions simplifiée (SAS) dans le droit des sociétés luxembourgeois (Transplanting the French Simplified Joint Stock Company - (SAS) into Luxembourg Company Law)

French Abstarct: Le droit luxembourgeois des societes vient d’etre l’objet d’une reforme d’ensemble. Parmi les principales innovations apportees par la loi du 10 aout 2016 portant modernisation de la loi du 10 aout 1915, telle que modifiee, concernant les societes commerciales figure l’introduction de la societe par action simplifiee (SAS). Le legislateur luxembourgeois s’est inspire a ce sujet tres largement du regime francais. La presente contribution examine le statut de la nouvelle SAS luxembourgeoise en le comparant au modele francais. Il en ressort qu’il existe de tres larges ressemblances entre les deux regimes, mais aussi une serie de differences tenant soit a des nuances dans les choix politiques, soit a des divergences dans les regles communes aux societes. English Abstract: Luxembourg company law has undergone recently a major reform. The introduction of a simplified public company (societe par actions simplifiee – SAS) is one of the major innovations by the law of 10 August 2016 modernising the Luxembourg company law act of 1915 as amended. The inspiration has been taken from French SAS. The present contribution analyses the regime of the new Luxembourg SAS by comparing it with the French model. Similarities outweigh some differences due to variations in the choices made by the legislators and certain divergences in the rules common to all commercial companies.