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Building a Framework to Address Failure of Complex Global Financial Institutions

Hong Kong Law Journal, Vol. 39. pp. 95-128, 2009

SMU Dedman School of Law Legal Studies Research Paper No. 47

37 Pages Posted: 7 Apr 2009 Last revised: 21 Feb 2011

Douglas W. Arner

University of Hong Kong - Faculty of Law

Joseph J. Norton

Southern Methodist University - Dedman School of Law; The University of Hong Kong - Asian Institute of International Financial Law

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2009

Abstract

The systemic phase of the current global financial crisis was triggered by the failure of large complex global financial institutions (LCGFIs). In this context, as recognised by the Group of 20, one of the greatest failures of both international and domestic legal and regulatory systems has been the lack of appropriate arrangements, including adequate insolvency arrangements, to address such failures when they occur. Following a discussion of the difficulties of dealing with the failure of large complex global financial conglomerates, the article discusses advocates a framework based upon prevention of failure as the first element and mechanisms to address failure when they occur as the second framework. The article concludes that while it may be possible to develop adequate international arrangements relating to prevention, there is still insufficient consensus in respect of actual insolvency arrangements for any international framework to emerge at present.

Keywords: LCFI, large complex financial institution, G20, Financial Stability Forum, insolvency, deposit insurance

Suggested Citation

Arner, Douglas W. and Norton, Joseph J., Building a Framework to Address Failure of Complex Global Financial Institutions (May 1, 2009). Hong Kong Law Journal, Vol. 39. pp. 95-128, 2009; SMU Dedman School of Law Legal Studies Research Paper No. 47. Available at SSRN: https://ssrn.com/abstract=1374126

Douglas W. Arner (Contact Author)

University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Joseph J. Norton

Southern Methodist University - Dedman School of Law ( email )

P.O. Box 750116
Dallas, TX 75275
United States

The University of Hong Kong - Asian Institute of International Financial Law ( email )

Faculty of Law The University of Hong Kong
Room 301A 3/F K K Leung Building Pokfulam Road
Hong Kong

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