The Quest for International Law in Financial Regulation and Monetaryaffairs - Introduction

The 2007–2009 financial crisis triggered a worldwide recession and a slump in international trade of some 10% in 2008 and 2009. Millions of jobs were lost, savings destroyed and opportunities missed. Governments responded with massive interventions to secure liquidity and solvency and to stimulate investment and consumption in the USA, the European Union and around the world. Future generations will need to live with the debts incurred. While the causes of the crisis remain controversial and manifold, one factor clearly deserves our attention: the lack of substantive principles and ‘hard law’ rules at the level of international or global law in the field of financial regulation and monetary affairs. The regulatory hands-off approach, which has dominated recent decades of international relations in these fields, contrasts with other areas of international economic law. International trade regulation witnessed an increased number of international rules and the reinforcement of a rule-oriented, if not rule-based, approach. Judicial dispute settlement and retaliation exclusively based upon international ruling and authorization was reinforced. The recession, so far, and due to such evolutions, has not led to a return to protectionism comparable with the reactions in the 1930s in the absence of a multilateral trading system. Likewise, rules on investment have been reinforced and the network of international agreements has greatly increased in the process of globalization. The crisis has evidenced the need for financial and monetary regulatory reform on the one hand, and for the establishment of appropriate mechanisms for the settlement of financial disputes and for the regulation of cross-border financial institutions on the other hand.