Financial Aspects of Alternative Payment Systems from the Point of View of Money Laundering Abstract The aim of this thesis is to provide a general overview of the current state of alternative payment systems with regard to their inclusion in the financial market, their properties and potentials for wider use, and to evaluate their possibilities to more effectively combat money laundering, terrorist financing and the proliferation of weapons of mass destruction. In the first chapter, the thesis explains the broader context with regard to financial systems, especially within the money market systems focusing on retail, while providing a deeper explanation of the context of European law and Czech law. The second chapter is focused on closer analysis of alternative payment systems with regard to their use. Alternative payment systems are divided into two basic categories for centralized alternative payment systems and decentralized alternative payment systems. The category of centralized alternative payment systems corresponds to the current conventional financial market, taking into account the innovations that have emerged in recent years. Decentralized alternative payment systems are based on the DLT Blockchain technology and the Islamic Hawala payment system is analyzed as a purely informal, decentralized...
This thesis examines one key research question: how has the ideational infrastructure of global financial markets impacted on the regulatory reforms within the transnational and Third World financial regulatory orders? It explores the ideological and performative role of ideas and their related technologies and practices in the reproduction of financial capitalism and regulatory neoliberalism in the globalized financial markets and related transnational and national regulatory institutions, specifically in Third World countries. The regulation of the liberalized interest rates in Kenya's credit market forms the basis of a three-part case study on reproduction of regulatory neoliberalism in Third World countries. The study is premised on the observation that the Third World's historical contestation of the transnational financial regulatory order has registered both progress and challenges, but regulatory neoliberalism and the globalization of financial capitalism grows more resilient, despite periodic setbacks. While noting the significance of structural power, stakeholder interests, and material embedding, in the reproduction of regulatory neoliberalism, this thesis identifies and focuses on specific ideas and related technologies and practices as making an under-stated contribution. It therefore explores the ideological and performative power of neoclassical economic theories, doctrines of legal formalism, technological ideas, artefacts, and their related practices, which form the ideational infrastructure of contemporary financial markets. The thesis examines their role in constructing meaning, relationships and institutions, allocating identities, interests and capacities, defining problems and their solutions, thereby enabling and constraining action. The main argument explored in this study is that the ideational infrastructure of the financial markets legitimates, constitutes and performs neoliberal financial markets and regulatory neoliberalism, within the transnational and national financial regulatory institutions. By presenting neoliberal financial markets, and regulatory neoliberalism as the only rational form of economic organization, this ideational infrastructure conceals their reproduction of inequality and power asymmetries between developed and developing countries in transnational regulation, and also between lenders and borrowers in Kenya's credit markets. It also restricts the regulatory possibilities available to Third World policy makers and regulators for addressing the externalities of neoliberal financial markets, including, as explored in the Kenya case studies, high interest rates and high indebtedness. The related key findings of the thesis are four-pronged. The first finding is the transformation of neoliberal hegemony in global financial markets from the centralized structural, military and economic power of the US and other developed countries, to a more decentralized, diffused hegemony embedded in ideologies, discourses, performative practices, and technologies. This is evident in the transformation of liberal hegemony in response to Third World contestation. The second finding is the 'relatively autonomous' agential power of legal, economic and technological ideas and practices underpinning regulatory neoliberalism, when decoupled from their originators. This is demonstrated by the origination and diffusion of ideas to and from the Bretton Woods institutions, and also their embedding within the bureaucracies of Kenya financial markets regulators. The third insight is the complex, co-constitutive, but not necessarily causal, relationships between legal formalism, neoclassical economic theories, technological ideas, and their related practices, which contribute to the resilience and durability of transnational regulatory neoliberalism. The thesis demonstrates the embodiment of these ideas and practices in the credit information sharing infrastructure, and their simultaneous constitution of neoliberal interest rates markets in Kenya. The fourth insight is the conceptual indeterminacy, inconsistency, and contradiction at the heart of the legal, economic and technological ideologies, and possibilities of harnessing their ideological and performative power towards establishing alternative economic organizations. The three Kenya case studies demonstrates the failure of the legal, economic and technological ideologies and practices employed by Kenyan financial regulators in the interest rates market. The thesis concludes that the present Third World efforts aimed at contesting the regulatory neoliberalism at the heart of the transnational financial regulatory order should also focus on the ideological and performative power of the ideational infrastructure of the global financial markets. In doing so, TWAIL practitioners should of necessity adopt an interdisciplinary approach in their reflection, conceptualization, articulation, dissemination and legal operationalization of an alternative international financial law praxis.
The recent decade has witnessed an extraordinary degree of innovation in the financial sector. Developments in financial technology, computing power, and networking theory have allowed decentralized online platforms such as Bitcoin to fundamentally change the way that financial services are provided. While these innovations have been applauded by many as bringing a welcome degree of competition to a sector long dominated by powerful incumbents, they also create a set of challenges for current financial regulation. How do fiduciary standards apply to algorithms? How does online finance affect the behavior of investors? And more generally, how can regulators monitor and constrain the financial industry when it is increasingly run by autonomous, dispersed computer networks? This Article argues that current financial regulation is inadequate to address the unique problems presented by the rise of Bitcoin and other fintech industries. In particular, these innovations raise concerns about the ability of financial regulation to promote three inter-related financial goals: the efficient allocation of capital, the protection of consumers, and the prevention of systemic risk. These goals, at the core of current approaches to financial regulation, are all challenged by fintech’s defining feature: its reliance on disembodied institutions and complex algorithms for its functioning. These traits render the traditional tools used by regulators to discipline markets—substantive behavioral obligations, the threat of sanctions, and the constraining effect of reputation—largely ineffective. The Article concludes by proposing a set of principles to guide lawmakers in designing a more effective financial regulatory structure for the Bitcoin era.
Nowadays the cryptocurrency industry is constantly growing and developing. Each year it attracts a big number of investors and businessmen from all over the world. Since the creation of Bitcoin in 2009, more than a thousand new cryptocurrencies with different features were created. Most countries are already working on an effective regulatory mechanism for the cryptocurrency industry. However, the question is whether the regulation will not contradict the essential features of digital currency, such as decentralization, independence and anonymity. This MA thesis analyzes the issue of cryptocurrency regulation as an important stage in their development and evolution. I compare the regulatory frameworks, developed by Canada, the USA, Great Britain and China, which are considered to be the world leaders in the cryptocurrency industry and the ICO sector. In this MA thesis I also try to explain how cryptocurrencies are perceived both by the cryptocurrency community and the regulators in order to give an answer to the question "What is a cryptocurrency?". Finally, this thesis also discusses the issue of cryptocurrency lobbying as an important part of the communication between the state and the third sector.
This chapter explores the context for financial integration in Europe, focusing on how changes in global financial markets are shaping the restructuring of finance in the European Union&s;s (EU). It also focuses on the ongoing restructuring of financial services and the moves towards a single currency in the EU. The chapter describes how financial restructuring is likely to affect prevailing regional inequalities in Europe, particularly in the context of the changing map of Europe and the possible enlargement of the EU to include central and eastern European countries. The development of financial markets in eastern Europe is an important part of the transformation from planned to market economies. The European Monetary System did deliver greater monetary stability to European economies, particularly through the mid- to late 1980s. In Hungary, efforts to decentralize the banking system and to introduce competition again started very early.
On May 26, 2010, Canada’s Minister of Finance tabled in the House of Commons a draft Securities Act. The purpose of the Act is to establish Federal government jurisdiction over securities legislation and create a Federal Securities Regulatory Authority. With this initiative, the Federal government proposes to centralize the regulatory apparatus to ensure uniformity of policies and regulations across Canada and meet international standards of quality and comprehensiveness. But this initiative also raises significant constitutional and economic policy issues. In a comprehensive paper examining the main arguments supporting a centralized securities apparatus, Pierre Lortie, Senior Business Advisor at Fraser Milner Casgrain LLP, argues that sound public policy should move ahead only if there is a strong body of empirical evidence demonstrating that the performance of the current regime is significantly inferior to that of other countries — particularly the United States — and that a centralization of the regulatory apparatus is necessary to correct the situation. The paper demonstrates that Canada’s decentralized securities regulatory regime has in fact shown flexibility, a great capacity to adapt to changing circumstances and an unrelenting ability to respond to particular industry or regional needs. It has also provided strong assurances against the hasty adoption of disruptive and costly regulations because it is less susceptible to the imposition of politically expedient or faddish requirements or the influence of a dominant industry or interest groups. In contrast, a centralized system runs the risk of turning into a disruptive, costly and regrettable initiative that will not give Canadians what they expect, while erasing many of the benefits achieved so far.
This chapter looks beyond the novelty of self-executing ‘smart contracts’ in blockchain networks and explores developments against the background fact that commercial parties have, for centuries, used documentary credit to simulate autonomous performance. Blockchain-based smart contracts and documentary credit share three core functionalities which are essential to any effective autonomous performance, analogue or digital—they both (i) act through internalized media of exchange; (ii) operate as closed systems; and (iii) provide means of securing sufficient resources to guarantee contractual performance. Using these three functionalities as a framework, this chapter conducts a comparative analysis of mechanisms for effecting autonomous contractual performance in a commercial setting. From this comparison, a few hypotheses are drawn regarding the potential areas where smart contract technology is more likely to find fruitful application. In particular, the chapter considers potential limitations to applying smart contracts to scenarios beyond digital asset transfers, how dispute resolution mechanisms should be designed to complement (rather impair) the autonomous nature of contractual performance under smart contracts, and potential capital cost implications which might arise in some cases when parties seek to replace human intermediaries with smart contracts.
This step considers the task of describing ownership in a way that is useful for a purely distributed peer-to-peer system of ledgers. This step explains how the blockchain documents ownership and handles the transfer of ownership. Additionally, this step points out the importance of ordering when documenting the transfer of ownership. Finally, this step highlights the importance of the integrity of transaction data for the integrity of the whole system.
The practice of securities holding, transfer, and collateral has changed significantly over the past 200 years—moving from paper certificates and issuer registers, to an intermediated environment, and from there to computerization and globalization. These changes have made transacting more efficient and thus rendered markets more liquid. However, the law has lagged behind and is now itself an obstacle to efficiency because international securities transactions are subject to considerable legal uncertainty. The latest global market development, a cryptographic transfer process commonly called the blockchain, is the most recent efficiency-enhancing change. It offers a unique possibility to create a consistent legal framework for securities from scratch, on the basis of a legal concept that, to some extent, resembles bearer securities. This article shows what the new international legal framework could look like in the light of experience gained from earlier developments.
Hawk and Huser, who started the legal debate on EU competition law relating to minority shareholdings, compared the evolving legal situation in the 1990s to shifting sands. More than two decades after their demand for a clearer approach, the situation has not substantially changed. The legal framework emerging from the recent Commission White Paper, entitled ‘Towards a More Effective Merger Control’, looks to be struggling in the midst of two kinds of shifting sands, that is, on the one hand, those pertaining to the uncertainty of current EU competition law on this matter and, on the other hand, those represented by evolving European corporate law and practice, among which are the increasing introduction of stronger minority shareholder rights, the diffusion of new forms of equity ownership, for instance the so-called morphable ownership, and the emergence of hybrid finance, especially in the banking sector. Such uncertainties at the corporate law level may suggest the opportunity to improve the proposed reform framework, redesigning thresholds, including the assessment of the anticompetitive effects of debt and hybrid financial instruments and eventually the decentralization of part or all of the application of the new rules at a national level.
Tema ovog rada su kriptovalute. Budući da većina ljudi nije pravodobno upoznata s ovom temom, ovaj rad prikazuje i opisuje kriptovalute te način na koji se upotrjebljuju u svakodnevnom životu. Kriptovalute (eng. cryptocurrency) digitalne su valute dizajnirane kao sredstvo razmjene. Poznate su po tome što su državne agencije i banke isključene iz procesa razmjene. Kriptovalute omogućuju jednostavnu, jeftinu i brzu transakciju na području cijeloga svijeta. Trenutno najisplativije kriptovalute su Bitcoin i Ethereum, a u radu je opisana njihova korisnost, prednosti i mane. Budući da se Bitcoinu predviđa uspješna budućnost i sve je prisutniji i prihvatljiviji na tržištu, u radu su navedeni primjeri iz Hrvatske koji to potvrđuju. Sve veći broj poduzetnika odlučuje se za uvođenje kriptovaluta. U primjerima je obuhvaćen širok spektar djelatnosti, od frizerskih usluga, preko raznih tvrtki koji se bave prodajom računalne opreme, ugostiteljskih usluga preko mogućnosti brzog i lakog podizana gotovine na kripto bankomatima pa sve do plaćanja komunalnih usluga, pa čak i humanitarno djelovanje. Mnogi smatraju da su kriptovalute samo sinonim za prijevare i pranje novca, no programeri tvrde da su kriptovalute samo jedna vrsta tehnologije, alat koji sam po sebi ne može biti ni dobar ni loš, ovisno o tome za što se koristi. Autor ovoga rada proveo je istraživanje o tome kako se može besplatno započeti trgovanje kriptovalutama te je anketom ispitao stavove ispitanika o implementaciji kriptovaluta u društvu.
Abstract Since the emergence of the virtual currency Bitcoin in 2009, a new, Internet‐based way of recording entitlements and enforcing rights has increasingly captured the interest of businesses and governments. The technology is commonly called ‘blockchain’ and is often associated with a closely related phenomenon, the ‘smart contract’. The market is now exploring ways of using these concepts for financial assets, such as securities, fiat money and derivative contracts. This article develops a conceptual framework for the governance of blockchain‐based networks in financial markets. It constructs a vision of how financial regulation and private law should set the boundaries of this new technology in order to protect market participants and societies at large, while at the same time allowing the necessary room for innovation.
This paper uses a contract theory framework to analyze the mechanisms of eurozone financial governance, with a focus on centralization vs. decentralization and incentive problems. By constructing a Stackelberg game model with n Ministries of Finance as the first movers and the European Central Bank as the second mover, we show that each government can create growth in its own country (self-benefit) by increasing government spending, but that this will increase inflation, resulting in a decrease in the value of the euro. As these effects are shared equally by eurozone countries (cost sharing), an incentive to free-ride at the expense of other countries is present. We then analyze a penalty-based solution to the free-rider problem and derive a second-best solution where a commitment not to renegotiate penalties ex-post is impossible. The optimal solution shows that ¡°limited sovereignty, ¡± that is, substantially constrained fiscal sovereignty, should be imposed as a high marginal cost for the issuance of public debt. Finally, we close the paper by discussing the possibility of Fiscal Integration (Fiscal Union).
First it captivated quintessential nerds; then political idealists who believed freedom had finally arrived. They projected their visions of revolution onto it. Predictably, the establishment rejected it. Research for this so-called revolution happened anonymously, born out of genuine curiosity rather than motivated by profit. Eventually, its usefulness became undeniable; industry and business paid attention. It became a revolution, as politicos had promised, but perhaps not the revolution they had in mind.
Are there differences between the sale of an unopened Super Mario Bros. computer game and of the digital collage of 5,000 images? Viewed from the perspective of the doctrine of exhaustion, we can easily conclude that the two transfers have significant differences. The auction of the tangible data carrier of the Super Mario’s 1986 edition (for $660,000) 1 fits well into the doctrine. The auction of the NFT (non-fungible token) representing Beeple’s “Everdays: the First 5000 Days” (for an equivalent of an astounding $69.3 million) 2 seems to be hype with a snowball effect rather than a modern encapsulation of digital exhaustion. Some commentators, 3 including the present author in collaboration with Alexandra Giannapoulou, João Pedro Quintais, and Balázs Bodó, 4 have thoroughly introduced the incompatibility of the NFT mania with the existing copyright status quo, and so – in connection with the present book’s topic – the sale of tokenized information, which is capable of representing information related to digital artworks, is practically excluded from the scope of the exhaustion of the right of distribution. At the same time, NFTs de facto offer a “code-based digital ecosystem that has practical consequences for the copyright-relevant fields of creativeness.” 5 The sale and resale of NFTs is possible; an exchange of information and title to “own” and “trade” information related to copyrightable subject matter is technologically guaranteed. In line with that, a quasi-exhaustion regime has also emerged. As such, the NFT mania can practically evidence the need for and modern technology’s capability of offering digital marketplaces for artworks as well.
In an earlier article, I argued that shadow banking—the provision of financial services and products outside of the traditional banking system, and thus without the need for bank intermediation between capital markets and the users of funds—is so radically transforming finance that regulatory scholars need to rethink their basic assumptions. This Article attempts to rethink the corporate governance assumption that owners of firms should always have their liability limited to the capital they have invested. In the relatively small and decentralized firms that dominate shadow banking, equity investors tend to be active managers. Limited liability gives these investor-managers strong incentives to take risks that could generate outsized personal profits, even if that greatly increases systemic risk. For shadow banking firms subject to this conflict, limited liability should be redesigned to better align investor and societal interests.
Independent regulatory bodies are important economic institutes, which take on a part of classical state affairs, which generally need particular, i.e. specialized knowledge, which does not exist in state management. European countries have different experiences when it comes to bearers of public authorization, representing intermediaries between the state on one hand, and companies and citizens on the other. In those countries with a traditionally big state apparatus, there are few agencies and vice versa, where there is a large portion of state affairs decentralized, small governments, supported by a modest central state apparatus are established. In the countries of Central and Eastern Europe, along with the process of transition, there occurred the process of "agencification". Serbia is maybe the worst example, with large coalition governments, which have established almost 200 different independent institutions. The causes of independent public body boom in Serbia are to be sought in a too liberal understanding of laws regulating this area, which has created the possibility of political feudalism. Also it has created an inappropriate autonomy of institutions (inappropriate for Serbian conditions, especially when it comes to finance), with a clear debalance of quality of employees in those bodies and the system of their compensation compared to contribution given by their work. Recent political changes, "new waves" of global economic crisis and large crisis of state financing are making boom problem solving quicker, and also are putting under control the behavior of bearers of public authorization in Serbia. However, it seems that this process still lacks good and impartial methodology and argumented atmosphere for making political decisions.
Decentralization to regional bodies and consolidation of short-term and developmental finance together constitute the best hope for governance reform in international financial institutions.