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9. Instruments Used by Islamic Banks to Manage Liquidity ShortagesVI. Transparency, Disclosure and Market Discipline; 10. Disclosure: Is There Any Difference?; VII. Deposit Protection and Bank Resolution; A. Deposit Protection; 11. Deposit Insurance Regulatory Framework; B. Bank Distress; C. Liquidation; 12. Bank Distress; VIII. Conclusion; Annex; 1. Definition of Key Shariah-Compliant Contracts; References.

Since the 2007–2008 global banking crisis, systemic risk has become the central target of policy design in banking regulation in many countries. At the same time, a growing attention has been paid to the systemic importance of bank heterogeneity. The need for diversity has even found its way into official policy documents, both at the European and national level. However, most of the new thinking on the regulatory reforms targeting systemic risk has been conducted within the framework of macro-prudential regulation, which may not be adequate to deal with diversity-related causes of systemic risk. This paper aims, therefore, at contributing to the growing literature on the relationship between systemic risk and banking regulation by (i) explicating the links between systemic risk and banking diversity; (ii) discussing the adequacy of macro and micro-prudential policy instruments to address diversity-related causes of systemic risk in banking; and (iii) laying out a basic framework for diversity-enhancing policies.

The prudential regulatory response for investment firms in the European Union, has been closely linked with the prudential regulatory response for banks. These close links between the supervisory regimes of investment firms and banks raise the question as to why this has been done. Did the European legislators see a similarity in the risks posed by investment firms and banks which would warrant a similar supervisory approach? And if so, what would these similarities be? This study analysed this premise of similarity between banks and investment firms. The first sections of this study contain an analysis of what an investment firm is and how the specifics of an investment firm's business model differ from that of a bank. The most significant difference, from a regulatory point of view, between investment firms and banks concerns the permissions regarding the handling of client money. A bank can take deposits from its clients and use those deposits to funds its own activities. An investment firm, when holding client money, must "safeguard the rights of clients and prevent the use of client funds for its own account". To better understand what an investment firm is this study discusses the various investment services and activities an investment firm can perform and the subsequent (prudential) risk to which these investment services and activities will expose the investment firm. What this study found is that the prudential risk for an investment firm can be assessed using a risk framework, consisting of 'operational risks' and 'financial risks'. The second section of this study discusses the international efforts to harmonize the regulatory response for investment firms and the choices made by the European legislator when establishing the regulatory response in the European Union. What is remarkable, is that the European Union is the only jurisdiction in the world that has applied the prudential supervisory approach of the Basel Capital Accords also to investment firms. The Basel Capital Accords provide standards for large internationally active banks, but the European legislators have chosen a wider application of the standards, including application for investment firms. The third section of this study addresses the new prudential requirements regime for investment firms in the European Union. This study will analyse the new regime specifically designed for investment firms, included in the Investment Firm Regulation (IFR) and the Investment Firm Directive (IFD). Although this regime is a good step forward in designing regulation more tailored to the specifics of investment firms, this study finds that the new rules still contains numerous shortcomings, particularly in the field of financial risk. Another aspect of the new IFR/IFD regime is a new categorization of investment firms. The European legislator concluded that some investment firms might pose a systemic risk, and that the CRD 2013 and CRR regimes are still a more appropriate framework for the regulation of these systemic investment firms. The European legislators seem to base their analysis of the systemic relevance of an investment firm only on the type of activities it can conduct and, partially, on the size of these activities. The systemic relevance of an investment firm cannot be based solely on the conduct of certain activities and the size of those activities. Based on the analysis in this study, the new prudential regime for investment firms in the European Union can be further improved upon. The new regime as adopted by the European legislators is already a significant improvement, but its shortcomings should be addressed to better align the applicable rules and requirements with the actual risk profile of an investment firm.

The author traces the development of the term 'macro‐prudential policy' since it was first coined three decades ago. He considers whether the UK Government's planned reforms of the financial regulatory system mean that future threats to UK financial stability are likely to be identified earlier and better than has been the case hitherto. He concludes that there are a number of requirements that the UK Government and the Bank of England will have to fulfill if the reforms are to have that effect and that the scope for action in the UK is inevitably determined in part by similar exercises internationally.

Land registration is the first step for landowners to have legal ownership certificates and be recognized by the state in the form of land certificates, the raw errors in land registration result in multiple interpretations of legal certainty regarding land data that will harm landowners, so the principle of prudence in registration land is very important to be applied so that in the registration process there is no mistake and legal certainty is guaranteed from the certificate issued. This study aims to find out and analyze the extent o which the principle of prudence is regulated in land registration regulations so that the implementation of land registration is carried out correctly and appropriately. The type of research used in this research is normative legal research, namely research based on legal materials whose focus is on reading and studying the materials of primary law and secondary law. The results of this study indicate that the principle of prudence has been stipulated in the land registration law by observing the principle of prudence indicators contained in article per article in the land registration law such as the Law of the Republic of Indonesia Number 5 of 1960 concerning Regulations Basic Agrarian Principles, Republic of Indonesia Government Regulation Number 24 of 1997 concerning Land Registration, Agrarian Minister Regulation Number 3 of 1997 concerning Provisions for Implementing Government Regulation number 24 of 1997 concerning land registration, and Regulation of the Head of National Land Agency of the Republic of Indonesia number 1 of 2010 about Land Service and Regulatory Standards.

This paper analyzes the relationship between monetary policy and prudential supervision in the Banking Union. There is no uniform global model regarding the relationship between monetary policy on the one hand, and prudential supervision on the other. Before the crisis, EU Member States followed different approaches, some of them uniting monetary and supervisory functions in one institution, others assigning them to different, neatly separated institutions. The financial crisis has underlined that monetary policy and prudential supervision deeply affect each other, especially in case of systemic events. Even in normal times, monetary and supervisory decisions might corroborate each other, or get into conflict. After the crisis, some jurisdictions have moved towards a more holistic approach under which monetary policy takes considerations of financial stability into account, while supervisory decisions pay due regard to price stability. The Banking Union puts prudential supervision in the hands of the European Central Bank (ECB), the institution responsible for monetary policy. Nevertheless, at its establishment there was the political understanding that the ECB should follow a policy of meticulous separation in the discharge of its different functions. This raises the question whether the ECB may still pursue a holistic approach to monetary policy and prudential supervision, respectively. On the basis of a purposive reading of the monetary policy and supervisory mandates of the ECB, the paper answers this question in the affirmative. Effective monetary policy (or supervision) requires financial stability (or price stability). Moreover, without a holistic approach, the SSM Regulation is more likely to provoke the adoption of mutually defeating decisions by the Governing Board. The reputation of the ECB would suffer considerably under such a situation − in a field where reputation is of paramount importance for effective policy. As any meticulous separation between monetary and supervisory functions turns out to be infeasible, the paper explores the reasons. Parting from Katharina Pistor's legal theory of finance, which puts the emphasis on exogenous factors to explain the (non)enforcement of legal rules, the paper suggests a legal instability theorem which focuses on endogenous reasons, such as law's indeterminacy, contextuality, and responsiveness to democratic deliberation. This raises the question whether the holistic approach would be democratically legitimate under the current framework of the ESCB. The idea of technocratic legitimacy that exempts the ECB from representative structures is effectively called into question by the legal instability theorem. This does not imply that the independence of the ECB should be given up, as there are no viable alternatives to protect monetary policy against the time inconsistency problem. Rather, any solution might benefit from recognizing the ECB in its mixed technocratic and political shape as a centerpiece of European integration and improving its transparency, responsiveness, and representativeness without removing its technocratic character. ; December 2017

In this paper we explore lessons from the global liquidity crisis pertaining to the prudential supervision role of central bank in an open economy. The narrow view of the role of central banks has been seriously challenged by the global liquidity crisis of 2008-9. The crisis validates central banks' responsibility for prudential regulations and policies aimed at reducing susceptibility of economies to crises, and the need for external debt management policy in emerging markets. Hoarding international reserves (IR) is a potent self-insurance mechanism. However, it is associated with relatively high costs and is also less efficient in absence of assertive external debt management policies. In the presence of congestion externalities associated with deleveraging, optimal external borrowing-tax-cum-IR-hoarding-subsidy reduces the cost as well as the scale of hoarding IR.

In this paper we explore lessons from the global liquidity crisis pertaining to the prudential supervision role of central bank in an open economy. The narrow view of the role of central banks has been seriously challenged by the global liquidity crisis of 2008-9. The crisis validates central banks' responsibility for prudential regulations and policies aimed at reducing susceptibility of economies to crises, and the need for external debt management policy in emerging markets. Hoarding international reserves (IR) is a potent self-insurance mechanism. However, it is associated with relatively high costs and is also less efficient in absence of assertive external debt management policies. In the presence of congestion externalities associated with deleveraging, optimal external borrowing-tax-cum-IR-hoarding-subsidy reduces the cost as well as the scale of hoarding IR.