Banking Law: Private Transactions and Regulatory Frameworks by Andreas Kokkinis

Part I
Banks and their regulators
This part introduces the reader to the notion of a bank and the different
types of credit institutions before examining the UK and the EU regulatory
framework within which banks operate.

1 The banking system
1.1 Introduction
This chapter serves as an introduction to the book and intends to familiarise
the reader with the nature and specificities of banks’ business, and the
rationales for and types of regulation that banks are subjected to. The
discussion starts with a brief account of the historical development of the
banking sector in the UK including the development of the legal forms used
by banking firms. It then examines the legal definition of credit institutions
in EU law; the main types of banks, including virtual banks; and the
economic functions and special characteristics of banks. Furthermore, the
chapter explains why banking regulation is necessary, and it distinguishes
between conduct of business regulation and prudential regulation, further
elaborating on the distinction between macro-and micro-prudential
regulations. The chapter concludes with a broad assessment of recent and
current regulatory trends in the financial markets which canvasses the key
challenges facing banking regulators and supervisors in the UK and the EU.
1.2 The historical development of banks and the
global financial crisis
Banks and other financial institutions have played a major role for a long
time in the economy of the UK. After the establishment of the Bank of
England in 1694 and the Bank of Scotland in 1695, banking grew steadily
in tandem with industrial capitalism. Originally, all private sector banks
operated as partnerships without separate legal personality and limited
liability. The history of the introduction of limited liability in the UK is

Banking Law: Private Transactions and Regulatory Frameworks by Andreas Kokkinis