• Artificial intelligence in financial services: systemic implications and regulatory responses

      Kapsis, Ilias (2020-04)
      The article offers information on expansion of Artificial Intelligence (AI) in the financial services industry. Topics include Financial institutions see in it more opportunities for efficiency generation, improved profitability, and opportunities for differentiation for the building of competitive advantages; and develop, to improve reporting, and compliance processes.
    • Blockchain and cryptocurrencies: essential tools in a two-tier financial system

      Kapsis, Ilias (2020-01)
      • This article discusses the current situation in the market of cryptocurrencies and joins the debate about the regulation of these financial innovations. • It argues that the appearance of cryptocurrencies was a response to market demand for more affordable and more inclusive banking. • It also argues that distributed ledger technology (DLT) which supports cryptocurrencies and has different characteristics than the technology used by traditional banking could help to create with cryptocurrencies a new, lower cost, more inclusive financial ecosystem separate from the traditional one. • The two ecosystems (traditional and new one) would form a larger two-tier financial ecosystem, which, overall would be more inclusive and more affordable. Also, it would be more effective in containing contagion and major economic disruption during future financial crises. • The current reliance on a single, ever growing, and immensely complex financial ecosystem is not sustainable longer term as systemic risks grow with the system and there are no mechanisms available to fully eliminate these risks. The costs of regulating the current market architecture are also excessively high.
    • The Court of Justice of the European Union

      Kapsis, Ilias (2016)
      This chapter examines the Court of Justice of the European Union (CJEU), which consists of three courts: the Court of Justice (or ‘the Court’), the General Court, and the Civil Service Tribunal. It focuses on issues of structure and procedure, the extent of the Courts’ jurisdiction, and their role in the promotion of European integration. The chapter also discusses the criticism directed at the CJEU for the way it exercises its judicial powers, which allegedly involve political considerations normally unacceptable for a judicial body. Lastly, the chapter looks at the main challenges facing the courts.
    • Sticks or carrots? How to make British Banks more socially responsible

      Kapsis, Ilias (2019-03)
      The relationship between banks and society in UK remains fragile more than 10 years after the financial crisis. The level of public mistrust, though lower than in the aftermath of the crisis, still re-mains at unsatisfactory levels especially as scandals continue to plague the sector. This raises the question of the effectiveness of reforms adopted in UK during the past 10 years to improve the public oversight of banks and change their culture. The reforms resulted in a significant expansion of the scope of financial regulation through the adoption of large numbers of new rules with binding effect on banks. In addition, new supervisory bodies were created to more closely monitor bank activities. This paper reviews the effects of the reforms on bank culture and concludes that expanded regulation and compulsory norms brought about mixed results and had only moderate effect on re-pairing the relationship between banks and UK society. The paper argues that more significant cultural change could come only from the banks themselves and therefore, going forward, the scope of compulsory norms should be reduced. The paper contributes to the ongoing dialogue between industry experts, policy makers and lawyers about the optimum levels of financial regulation especially in light of recent calls for rolling back parts of public interventions in the financial sector.
    • A Truly Future-Oriented Legal Framework for Fintech in the EU

      Kapsis, Ilias (May 2020)
      This article reviews critically the recent EU legislation and proposals for the regulation of financial technology (‘fintech”) and makes recommendations for legal improvements in the proposed frameworks, which will help to accelerate fintech growth, a declared EU goal, in the years to come. The rise of fintech driven by non-bank entities (technology startups, finance, big tech and big retail companies) helps to transform financial services industry, but also threatens the market positions of traditional banks and through them potentially the stability of the financial system. The current EU proposals, as presented in the Commission’s Fintech Action Plan published in 2018 and follow-up measures, outlined a number of steps to support fintech, while ensuring the protection of market stability and consumers and the maintenance of level playing field in the financial services markets. The article argues that, while the Commission’s proposed policy mix contains certain positive measures for fintech, it remains, overall, conservative and favours the incumbents. It also argues that unless the Commission becomes bolder and adopts a more flexible legal framework for fintech (for which the article makes specific recommendations), the latter will not grow at the pace needed to help build a competitive ad-vantage for the EU financial sector. The Commission’s continuing support of the established market landscape dominated by financial conglomerates employing traditional business models risks undermining the ability of the European financial system to adapt to the changing competition landscape created by advancing financial technologies and to fully address stability concerns, which emerged as a result of the financial crisis.