S. International Banking and Finance: The Challenges

A global pandemic. Soaring over indebtedness. Huge budget deficits. Credit problems. Equity markets crashing and rebounding. Inflation. Increased interest rates. Russian aggression against Ukraine. Middle Eastern conflicts. China’s financial crisis. We are also facing the Basel III endgame and Trump's election impact on the adoption and implementation of financial regulation in the US.
Several bank crises emerged in 2023. The FTX fraud has plagued the crypto markets. The emergence of Artificial Intelligence challenges the way finance and markets are operating.

In a nutshell, the threats to financial stability has become multi-faceted. How did the financial sphere -both public and private- face those challenges? With a debt level that has reached unmanageable proportions, are we getting closer to a global financial crisis of unprecedented proportion?

The world is in the middle of the deepest and wider crisis of its history.
In just five years, risks associated with financial services have exploded, provoking a massive dislocation of assets and liabilities across the private and public sectors and threatening financial stability in both advanced and emerging economies. Massive stimulus actions by governments and quantitative easing by central banks are now growing at an unpredictable speed.
Inflation has prompted interest rates to explode from a quasi-zero level: the risk of inflation limits their decrease accumulation interest costs of borrowing.

While financial risks are nothing new, understanding the way in which they have evolved is critical. 17 years after the Global Financial Crisis, the risks taken by governments, central banks, banks, insurance companies, and capital markets have changed, and mostly deteriorated. What have we learned from these evolutions? How has the continuing COVID-19 crisis exacerbated risks to global financial markets risks? How effective has the new wave of regulations been in easing financial concerns related to the global lockdown? How are wars financed? Who will foot the bill for these massive costs?
The regulatory efforts have not been robust enough to limit the damage, and in some cases, they have been at the origin of disruptions. Even when regulation was in place Governments and Central Banks have chosen to intervene without applying their own rules.

This course will explore
• the purposes of financial regulations;
• foundational principles of banking and insurance;
• central banks and other regulatory and supervisory authorities;
• sovereign debt and default risks;
• risk management and regulation;
• banking ratios and the uniform application of global financial regulations;
• climate change and challenges to financing the energy transition;
• shadow banking and securitization;
• the role of global capital markets;
• governance, culture, and conduct in the financial industry, including the impact of financial markets on increasing inequality;
• the regulation of financial innovations such as electronic payment systems and cryptocurrencies;
Course sessions will include lectures, 15-minute student presentations, and guest speakers. A 6-10 page paper will be requested by the end of the course on an agreed-upon topic. LLM and JD papers on the course topics are accepted. The style of the class is very interactive. No previous economic or financial expertise is requested. In addressing these topics, the course seeks to improve students’ understanding of international banking and finance and provide them with the background necessary to understand developments in financial regulation.
Learning Outcomes
By the end of the course, students will improve their understanding of:
• International finance from a regulatory, policy, and legal perspective, including recent issues in financial regulation and risks to global financial markets;
• The interaction of monetary and fiscal policy;
• Emerging risks (and opportunities) affecting global financial stability, including climate change and technological innovations;
• Possible additional legal approaches to regulating global financial markets in order to mitigate existing risks, reduce financial inequalities, and managing a global crisis:
• The intersection of legal and other disciplines relevant to the analysis of international financial regulation, including economics, social sciences, and cultural studies;
• The influences of global political and financial institutions on international banking law:
• The societal impact of recent evolutions on innovation, climate change and inequalities.