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- Title
RING-FENCING.
- Authors
SCHWARCZ, STEVEN L.
- Abstract
"Ring-fencing" is often touted as a regulatory solution to problems in banking, finance, public utilities, and insurance. However, both the precise meaning of ring-fencing, as well as the nature of the problems that ring-fencing regulation purports to solve, are ill-defined. This Article examines the functions and conceptual foundations of ring-fencing. In a regulatory context, the term can best be understood as legally deconstructing a firm in order to more optimally reallocate and reduce risk. So utilized, ring-fencing can help to protect certain publicly beneficial activities performed by private-sector firms, as well as to mitigate systemic risk and the too-big-to-fail problem inherent in large financial institutions. If not structured carefully, however, ring-fencing can inadvertently undermine efficiency and externalize costs.
- Subjects
UNITED States; GOVERNMENT regulation -- Social aspects; RISK management of financial institutions; PUBLIC utility laws; SYSTEMIC risk (Finance); INSURANCE law; BANKING Act of 1933 (U.S.); RETAIL banking; BANKING laws
- Publication
Southern California Law Review, 2013, Vol 87, Issue 1, p69
- ISSN
0038-3910
- Publication type
Article