Introduction: The Global Financial System and the Problems of Regulation1. The Changing Nature of BanksDefinitionsMoney, Credit Creation, and Fractional Reserve BankingFinancial Innovation and the Changing Nature of BanksThree Distinctive Features of Modern BankingReferencesFurther Reading2. Panics, Bank Runs, and Coordination ProblemsThe Structure of Banks’ Balance SheetsCoordination Problems and Bank RunsPanic and Contagion in Modern Financial SystemsFree Riders and RegulationReferencesFurther Reading3. Collapsing Dominos and Asset Price SpiralsCollapsing DominosAsset Price SpiralsThe Global Financial Crisis of 2007–2009ReferencesFurther Reading4. The Financial Safety Net and Moral HazardThe Financial Safety NetMoral HazardIs There an Alternative?ReferencesFurther Reading5. Sources of Financial RegulationNational LawsInternational LawReferencesFurther Reading6. Bank Licensing and Corporate GovernanceThe Purpose of Bank LicensingThe Fundamentals of Bank LicensingFitness and Propriety of Bank ManagementSignificant Changes in OwnershipChoice of Bank CharterCross-Border IssuesPrinciples of Sound Corporate GovernanceSarbanes-Oxley Act of 2002ReferencesFurther Reading7. Bank in Corporate Groups: Ownership and AffiliationBank-Commerce LinkagesThe Separation of Banking and FinanceChanges to Structural Regulation of the Combination of Banking and Other Financial ServicesReferencesFurther Reading8. The Rationale for Bank Capital RegulationWhy Regulate Bank Capital?Leverage RatiosRisk-Weighted CapitalCriticisms of the Basel Capital AccordReferences9. The New Capital Adequacy Framework: Basel II and Credit RiskThe Standardized ApproachThe Internal Ratings-Based (IRB) ApproachesDealing with Financial InnovationReferencesFurther Reading10. The New Capital Adequacy Framework: Basel II and Other RisksMarket RiskOperational RisksPillar 2 RisksReferencesFurther Reading11. Direct Limits on Banks’ Risk TakingCredit Concentration RiskLiquidity RiskReferences12. Consolidated Supervision and Financial ConglomeratesWhat Is Consolidated Supervision?The Need for Consolidated SupervisionConsolidated Supervision of Cross-Border BanksFinancial ConglomeratesReferences13. Anti-Money LaunderingWhat Is Money Laundering?The Impact on BanksInternational ResponseBanco Delta Asia Case StudyReferencesFurther Reading14. Bank InsolvencyThe Goals and Types of Bank Insolvency RegimesLegal Framework for Bank InsolvencyDetermination of InsolvencyAdministration Orders and ConservatorshipsReceivershipReferencesFurther Reading15. Institutional Structures of RegulationInstitutional and Functional RegulationRise of the Integrated RegulatorTwin Peaks (Objectives) ApproachRole of the Central Bank in Bank SupervisionEvaluation of Structural ReformsReferencesFurther Reading16. Regulation After the Global Financial CrisisThe Causes of the CrisisRethinking the Assumptions of RegulationNew Directions in Capital AdequacyMore Radical OptionsThe International DimensionReferencesAppendix: Introduction to Regulation and Market FailureIndex