Addressing Regulatory Arbitrage: A Conflict of Laws Approach to Central Bank Coordination
Many of the core challenges facing national financial regulators stem from a classical puzzle of international law: how to manage conduct that is beyond national jurisdiction, or conduct that is potentially subject to multiple regulatory authorities, in a context in which markets are transnational and market participants arbitrage the differences between regulatory regimes to their own advantage. The dominant approach of the G20 to this challenge has been a model borrowed from public international law and institutions. After reviewing some of the limitations of this approach, the paper considers how tools in the private international lawyer's toolkit might offer a very different, yet potentially more effective approach.
Bretton Woods 1.0: A Constructive Retrieval
Global trade imbalance and domestic financial fragility are intimately related. When a nation runs permanent current account deficits to maintain global liquidity, as has the U.S. for decades, its central bank becomes the de facto central bank to the world. That prevents it from playing its essential credit-modulatory role at home. And that, in turn, renders credit-fueled asset price bubbles and busts unavoidable, irrespective of the nation's regime of financial regulation. Counterpart remarks hold of nations that run permanent surpluses, notably China, which now faces looming financial dysfunction of its own. This Article retrieves and updates J.M. Keynes's original International Clearing Union ("ICU") plan for what ultimately became the International Monetary Fund ("IMF," "Fund"). It first tells the tale of Keynes's original ICU plan as advocated at Bretton Woods, emphasizing the plan's basic structure and motivations as rooted in Keynes's financially oriented re-conception of monetary and, what later became known as, "macroeconomic" theory. It then traces recent financial, monetary, and macroeconomic troubles to our not having adopted something more like the Keynesian IMF. Finally, it proposes an updated version of Keynes's ICU arrangement suitable for today's international trade and financial order.
Communicative Imperatives in Central Banks
This paper examines how the regular communication of central bank policy assessments plays a decisive role in the emergence and refinement of a new monetary regime - a "public currency." At the heart of this regime is the far-reaching premise that the public broadly must be recruited to collaborate with central banks in achieving the ends of monetary policy: "stable prices and confidence in the currency."
The Big Blur: Blurring the Line Between Monetary and Fiscal Spaces
Since 2008, the world's leading central banks stand accused of abandoning their core mandates and straying into fiscal policy. Extraordinary crisis response measures, including large-scale purchases of illiquid assets and government debt by the U.S. Federal Reserve, the Bank of England, and the European Central Bank, have helped blur the line between monetary and fiscal spaces. This paper considers the legal form and policy function of this line, and the political significance of its blurring for central banks, governments, and other constituents.