Volume 7, Issue 3 -

The resurrection of the securitisation market lies at the heart of the recent EU project to build a pan-European capital markets union (CMU). This is in line with the existing policy goal to expand market-based, disintermediated financing channels, which has been ongoing since the 1980s. Initial efforts to restart the moribund securitisation market in Europe have been carried out through a number of public consultations which have more recently converged towards the Commission’s proposal for a Regulation laying down the rules to create a European framework for Simple, Transparent and Standardised (STS) securitisation. This article provides a critical perspective on the EU project to create a capital market union and in particular on the proposed framework for STS securitisation. The critique is firstly centred on the problematic coordination of the different policy objectives, which emerged from the consultations’ responses. Secondly, it points to four specific areas of concern, namely, the difficulty to define securitisation for the purpose of the regulation, the dangers of linkages with the shadow banking system, the unresolved reliance on external ratings, and the question of STS supervision. It is argued in this article that the persistence of these problems in the current design leads to questioning whether a revived securitisation market would still fuel the shadow banking system and create systemic risks. It is pointed out that the difficulty to regulate complex legal relationships typical of long intermediation chains – such as tranched securitisation – makes the proposed framework still weak. This article submits that only a tighter approach to transaction standardisation could ensure the simplicity and transparency that the Commission is hoping to achieve. Equally, a supervisory infrastructure centred on the overseeing power of a pan-European authority is needed to prevent pre-crisis legal problems from recurring.

Pension obligations constitute a critical issue for public finances and budgets. This is especially true for the European Union whose institutional mechanism aims to supervise Member States’ spending through centralised budgetary rules based upon financial covenants. In this context, accounting methods of recognition and measurement of pension obligations become an integral and critical aspect of Europe’s transnational budgetary and financial supervision. Drawing upon a comprehensive overview of pension management and regulation, this article aims to analyse the ongoing debate on accounting for pension obligations with a specific attention to the harmonization of European Public Sector Accounting Standards (EPSAS). While the European Commission has been favouring the ‘indisputable reference’ to the International Public Sector Accounting Standards (IPSAS), European Member States’ practices and views remain inconsistent with the normative solution imposed by the IPSAS 25, which favours and facilitates Definite Contribution pension schemes. In this context, we do summarise the IPSAS position mimicking the IFRS, review the pension’s accounting in national statistics and EPSAS debate, and provide some building blocks for a comprehensive model of accounting for pension obligations that admits and enables several viable modes of pension management.

This article develops a critical reflection on the way the efficient market hypothesis (EMH) is debated, and in so doing tries to design an efficient way to criticize it. We first expose the debate is flawed by a confusion between two different forms of efficiency that we call technical and fundamental respectively, a confusion based on the implicit assumption that the first one implies the second one. We then show this inference requires the validity of a hypothesis which is neither tested nor part of the explanatory model of what is tested, and that the tested efficiency is generally the technical one, save in some scarce cases. This very scarcity is finally related to the prevalence of the investor’s point of view in financial theory: technical efficiency does make sense for investors, but not for regulators, because it does not imply per se that market valuation is the best one for financial assets. Assessing the ability of markets to produce informed judgements on the price of these assets would mean to reopen a debate on fundamental efficiency.

This new book offers an interesting vision of a new legal system, one aimed at promoting sustainable living on the planet. The vision is supported with an interesting and rich discussion comparing the history of scientific thought to the history of legal thought, noting that legal thinking has not yet evolved from mechanistic traditional individual rights centered thinking to a focus on networks and relationships. Yet it needs to do so to move to a new conception of “eco-law” which will support sustainable living and regeneration of the ecosystem. The vision is appealing and the presentation effectively sets the stage for further discussion. Eventually more will be needed to support the adoption of a new “eco-law” vision.

If nature were a commons would the homo economicus be a rational agent dropped in an evolutionary trap or an ignorant pedantic? Capra and Mattei wrote a subversive book. It points to the same revolution that the holistic, complex approach suggests by decoupling the economic process to integrating the web of life of the nature in law and economics.