Douglas ARNER (International Financial System: Law and Practice)
Peter Ellinger Visiting Professor
Visiting Period : 11 January 2016 to 29 January 2016

Douglas W. Arner is a Professor in the Faculty of Law of the University of Hong Kong. He specializes in economic and financial law, regulation and development. He served as Head of the Department of Law of HKU from 2011 to 2014 and from 2006 to 2011 he was the Director of the Faculty's Asian Institute of International Financial Law, which he co-founded in 1999 along with the LLM in Corporate and Financial Law (of which he serves as a Director).

Douglas is a member of the Hong Kong Financial Services Development Council and of the International Advisory Board of the Australian Centre for International Finance and Regulation. He has also served as a consultant with, among others, the World Bank, the Asian Development Bank, APEC, the European Bank for Reconstruction and Development, and the Development Bank of Southern Africa.

The banking world is in turmoil. The credit crisis has generated major regulatory adjustments, both in quantitative and qualitative terms. At the same time, information technology developments are having a considerable impact on the provision and management of banking services. This Colloquium, the second in a series of NUS-ETH Conferences, aims at tackling some of the issues associated with these developments. More specifically, banking sector resilience will be addressed via contributions on capital and risk management whereas access to funding will be discussed via contributions on interbank markets and crowdfunding. In addition, the Colloquium will deal with two issues subject to significant media attention: consumer bankruptcy and banking secrecy.

The principle of Lender of Last Resort, nowadays more commonly referred to as Emergency Liquidity Assistance, provides a bank with a privilege that no other financial institution, let alone non-financial company possesses: in a situation of liquidity shortages, the central bank steps in when markets shy away from providing financing to a bank. Often misunderstood, however, the principle was never meant to support insolvent banks. Only solvent banks were meant to have recourse to the inexhaustible sources of liquidity of central banks and invariably subject to strict conditions.

Such a principle fits perfectly into a monetary system where central banks provide limited or no financing to banks on a regular basis and where insolvencies of banks are resolved without their involvement. In times where unconventional monetary policy measures seem to become the new standard, however, the concept of Lender of Last Resort loses its distinct features. Standing facilities provide unrestricted amounts of financing to banks for attractive, i.e. market-aligned conditions and asset purchasing programmes flood banking markets with more liquidity than can be usurped by them - at least the additional application of 'Quantitative Easing' as a measure to bypass banks and provide liquidity to the economy in a more direct way seems to indicate this. What then is the current scope of application of Lender of Last Resort? Is the scope of application widened and the conditions softened to help this principle maintain a significant role in today's world of expansionary monetary policy?

"Financial technology" or "FinTech" refers to technology enabled financial solutions. FinTech is often seen today as the new marriage of financial services and information technology. However, the interlinkage of finance and technology has a long history, with financial services by the 1990s becoming one of not only the most globalised but also the most digitised segments of the economy. Prior to 2008, this process was dominated by traditional financial institutions. Since 2008 a new era of FinTech has emerged in both the developed and developing world. This era is defined not by the financial products or services delivered but by who delivers them. This latest evolution of FinTech, led by start-ups, poses challenges for regulators and market participants alike, particularly in balancing the potential benefits of innovation with the possible risks of new approaches.