In the economic part of the course, students are introduced to financial intermediation and its regulatory environment as it has recently been developed in the European Union. The links between the economic activities of financial intermediaries and regulators are discussed: What is the rationale behind regulation (risk management, asymmetric information, moral hazard and agency problems) and how does it impact on the business plans of financial institutions? Some time will be spent on how financial markets work and which main products are traded (interest rate swaps and derivatives). The interaction between monetary policy and financial intermediation is also explored (European perspective).
From a legal perspective, this course sets out the key principles of financial law applicable to banks. The course starts with an overview of the global and European supervisory frameworks for banks. This includes the Eurozone's single supervisory mechanism and single resolution mechanism. Second, an overview of the key principles governing EU market access for banks is given. Third, substantive rules on banks’ own funds, liquidity, leverage and governance, as well as on deposit guarantee schemes, are scrutinised. Fourth, the course explores the rules on a bank's traditional core activity, providing credit, especially consumer credit and mortgage credit. The rules on banks providing payment services are also discussed. Fifth, it explores a selection of financial markets law, including rules on derivatives and the provision of investment services or advice to clients.