Tuesday, September 13, 2016 - 4:10pm to 5:45pm
Location: 
Solarium (room FA2) Falconer Hall - 84 Queen's Park

 LAW & ECONOMICS WORKSHOP SERIES
presents

Dan Awrey
Associate Professor of Law & Finance
University of Oxford, Faculty of Law


Law and the Shadow Payment System

(Dan Awrey and Kristin van Zwieten)

Tuesday, September 13, 2016
4:10 – 5.45
Solarium (room FA2) - Falconer Hall
84 Queen's Park 

Banking, derivatives, and structured finance may attract the lion’s share of accolades and approbation in global finance – but payment systems are where the money is.  Historically, payment systems in most jurisdictions have been legally and operationally intertwined with the conventional banking system.  The stability of these payment systems has thus benefited from the prudential regulatory strategies governing deposit-taking banks.  These strategies include deposit guarantee schemes, emergency liquidity assistance, and special resolution regimes.  Importantly, these strategies have the practical effect of relaxing the strict application of corporate insolvency law, thereby enabling banks – and the payment systems embedded within them – to continue to perform payment and other functions even under severe institutional stress.  Recent years have witnessed the emergence of a vibrant shadow payment system.  This system includes peer-to-peer payment systems such as PayPal, mobile money platforms such as M-Pesa, and crypto-currency exchanges such as Mt. Gox.  The defining feature of these shadow payment systems is that they perform the same payment functions as conventional banks, but without benefiting from the prudential regulatory strategies which ensure that bank-based payment systems can continue to function during periods of institutional stress.  This paper examines the potential risks to shadow payment system customers generated by this functional gap, along with the likely effectiveness of various strategies which these systems currently, or might in future, employ to address these risks. 

Dan Awrey is an Associate Professor of Law and Finance and Academic Director of the MSc in Law and Finance programme.  Dan's teaching and research interests reside in the area of financial regulation and, more specifically, the regulation of banks, investment funds, derivatives markets, and financial market infrastructure.  He has undertaken research and provided advice at the request of organizations including HM Treasury, the UK Financial Conduct Authority, the Commonwealth Secretariat, and the European Securities and Markets Authority.  Before entering academia, Dan served as legal counsel to a global investment management firm and, prior to that, as an associate practicing corporate finance and securities law with a major Canadian law firm.  He holds degrees from Queen's University (B.A., LL.B.), the University of Toronto (LL.M.) and Oxford University (D.Phil.). 

Dan is also a Fellow of Linacre College.

For more workshop information, please contact Nadia Gulezko at n.gulezko@utoronto.ca.