Center for Financial Studies

Financial Regulation in Europe – just science or also an art?

The fact that financial regulation is a science would hardly be argued by anyone. But looking at financial regulation as an art – this connection is not easy.

The address given by the President of the Federal Financial Supervisory Authority (BaFin), Felix Hufeld, on March 16, focused precisely on the question of whether financial regulation is a science or an art. More precisely, which part of regulatory processes are considered as science and which are considered an art. Hufeld’s address was hosted by the Center for Financial Studies (CFS) at the Financial Centre Frankfurt’s Goethe Universität, whose lecture series is well known for its top-class speakers.

Hufeld described the basic concepts, models, and quantitative methods of regulation as scientific, but, further on in his lecture, he shifted focus to shed light on the parts of regulation that transcend these scientific elements, which Hufeld designated as art. These questions and decisions which cannot be answered by mathematical models, which necessitate consideration between different regulatory objectives, which can also intersect in a tense relationship. “In short: questions that rely primarily on one’s personal judgment,” as Felix Hufeld summarizes. These difficulties are exacerbated by regulation moving towards a context of global development, by the continuous process of Europeanisation, the dynamism of the markets, as well as the fundamental changes brought by digitalisation.

Using four examples, Hufeld dove deeper into this understanding of regulation as an art: financial stability vs. profitability, risk sensitivity vs. procyclicality, principle-based vs. rule-based regulation, and consumer protection vs. credit institutions’ capacity to act. These and other areas of tension require individual, creative and pragmatic decisions from regulators based on principles of stability and continuity, which must be balanced by the tension between contradictory regulatory objectives and dynamic developments. At the end of this process, the goal of regulatory authorities is to realize a sustainable, viable order in financial markets and to avoid the vicious cycle of crisis to regulation to deregulation and back to crisis.

The full text of Felix Hufeld’s lecture can be found here (German).

16 September 2016: Joint ESAs’ Consumer Protection Day

The Joint Committee of the European Supervisory Authorities (ESAs) is pleased to announce that the 4th “Joint ESAs Consumer Protection Day” will take place on 16 September 2016 in Paris. For the first time, the ESAs will livestream the event so that the content is available to everyone. The event aims to promote exchanges of views on consumer protection topics between regulators, consumer representatives and the finance industry.

Since its inception, the Consumer Protection Day has become an important milestone for stakeholders across the EU that have an interest in the topic of consumer protection. In June 2015, the third annual Joint ESAs Consumer Protection Day hosted by the European Insurance and Occupational Pensions Authority (EIOPA) in Frankfurt attracted over 300 consumer representatives, academics, consultants, national supervisors, experts from EU institutions and members of the financial services industry.
Consumer and investor protection is a common statutory objective of the three ESAs – the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and EIOPA. The Joint ESAs Consumer Protection Day aims to gather consumers, regulators and industry participants together to discuss consumer protection-related issues in the financial services area.

Picture: ESA Joint Committee

Frankfurt Institute for Risk Management and Regulation: Yearbook 2016

Once again the work of the Frankfurt Institute for Risk Management and Regulation is presented in their annual yearbook. In this edition, you will also find a wide range of expert articles by respected authors from the colourful world of risk management and regulation.

As the well-known saying goes, the only thing that is constant is change. This piece of wisdom is sometimes attributed to the pre-Socratic philosopher Heraclitus (approx. 535 BC) and sometimes to the British natural scientist Charles Darwin (1809 to 1882), but whoever coined the phrase, it definitely applies to the issues of risk management and regulation and also to the 2016 Yearbook.

This year’s edition has been given a complete visual makeover and modernization. The individual sections now have a more transparent design. This year’s Yearbook has also increased size with more than 40 articles outlining FIRM’s activities as well as the colourful diversity and heterogeneity of the issues they address.

Download the FIRM Yearbook 2016 here!

Frankfurt Finance Summit: On the Move

The 6th Frankfurt Finance Summit will take place on May 12, 2016. This year’s theme is On the Move – the Future of Finance and renowned experts will be on location to deliver Keynotes and participate in moderated panel discussions. Amongst those attending are German Minister of Finance Wolfgang Schäuble and Günther Oettinger, the EU Commissioner for Digital Economy and Society.

The themes of the panels are:

  • Redefining Banking – Regulatory and Economic Challenges
  • Digitalisation – The Dawning of FinTechs
  • Tectonic shift – Where will finance move to?

The conference will be help in Kap Europa at the Frankfurt convention center. The programme can be found here.

Frankfurt Finance Summit 2015

Frankfurt Finance Summit Explores Paths for New Growth in Europe

Under the motto Reality Check – How to Foster Growth in the New Regulatory Environment, central bank governors, regulators, representatives of supervisory authorities, financial policy makers, academics and practitioners will meet for the fifth time in the Financial Centre Frankfurt to discuss questions of financial market regulation and their impact at the Frankfurt Finance Summit. Read more

Frankfurt Finance Summit 2014 Michel Barnier

The State of the Union: Michel Barnier and Danièle Nouy at the Frankfurt Finance Summit

At the Frankfurt Finance Summit, Michel Barnier, European Commissioner for Internal Market and Services, highlighted a fundamental benefit of the banking union in his opening address. “The banking union means that taxpayers are no longer in the front row when banks have to be rescued.” Danièle Nouy, President of the Supervisory Council at the European Central Bank, points to existing challenges on the path to greater financial stability: “the short-term challenge is to strengthen confidence in the banks’ balance sheets.” Read more

Frankfurt Finance Summit 2013 Christine Lagarde

The Future of the Euro: Christine Lagarde and Wolfgang Schäuble at the Frankfurt Finance Summit

The third annual Frankfurt Finance Summit will take place March, 2013 at the Deutsche Bundesbank (German Federal Bank). Attending will be some 170 central bank governors, banking and securities regulators, and representatives of the finance industry from 19 countries to discuss the future of the euro and how regulation and crisis management affect the world’s financial economy. The Summit is in English and will be broadcast live over the Internet at: www.frankfurt-main-finance.com/stream Read more

The presence of regulatory authorities in Frankfurt strengthens not only the finance industry but also the infrastructure of the Financial Centre. Frankfurt’s reputation as a regulatory hub is further augmented by European Supervisory Authorities selecting the Financial Centre as their home.

„The presence of regulatory authorities in Frankfurt strengthens not only the finance industry but also the infrastructure of the Financial Centre. Frankfurt’s reputation as a regulatory hub is further augmented by European Supervisory Authorities selecting the Financial Centre as their home.“

From: Wolfgang Hartmann, Vorstandsvorsitzender des Frankfurter Instituts für Risikomanagement und Regulierung (FIRM) - 2015