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Principles of Banking Law

Principles of Banking Law (3rd edn)

Sir Ross Cranston, Emilios Avgouleas, Kristin van Zwieten, Christopher Hare, and Theodor van Sante
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date: 06 December 2023

p. 31. Banks in the Financial Systemlocked

p. 31. Banks in the Financial Systemlocked

  • Ross Cranston, Ross CranstonProfessor of Law at the London School of Economics
  • Emilios Avgouleas, Emilios AvgouleasProfessor of International Banking Law and Finance at the University of Edinburgh; European Banking Authority Stakeholder Group
  • Kristin van Zweiten, Kristin van ZweitenClifford Chance Associate Professor of Law and Finance at Oxford University and a Fellow of Harris Manchester College
  • Theodor van SanteTheodor van SanteBarrister at 3 Verulam Building, Gray's Inn, London
  •  and Christoper HareChristoper HareTravers Smith Associate Professor of Corporate and Commercial Law at the University of Oxford and a Fellow of Somerville College


This chapter explains the economic functions and organizational structure of contemporary banking. It first discusses the role of banks in the economy, offering a brief account of the role of the financial system in capital allocation and risk management as well as key bank functions in this respect. It then details the rise and fall of the multifunctional bank in the era of globalization, and the different aspects of the too-big-to-fail bank problem and its possible causes. It explains the international nature of bank regulation and the standard-setting and regulatory coordination provided by key transnational regulatory networks such as the Basel committee on Bank Supervision and the Financial Stability Board; discusses the legal definition of the term ‘bank’ in the US and of ‘credit institution’ under EU legislation; advances a new understanding of what the term ‘bank’ means in the post-2008 era.

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