Regulation of Banks in the European Union, the United States, and China: Banking Law in Comparative Context

Abstract

This study presents the main features of regulation of banks in the European Union, the United States, and China. Each regime is reviewed in its historical context, exploring stages leading to the given jurisdiction’s contemporary regulation of banks. After mapping the differences and similarities between regulation of banks in the European Union, the United States, and China, the article identifies possible reasons for the detected divergence and convergence, employing a comparative law approach drawing on multidisciplinary insights. The article reveals that the main differences between regulation of banks in the three jurisdictions lie in the historical development, stances on universal banking, aversion to centralised economic and supervisory power, as well as in the structure of the banking sector. The divergence stems from differences in historical, political, institutional, and economic factors between the jurisdictions. Similarities in regulation of banks are evident in similar objectives, financial safety nets comprising a central bank and deposit insurance scheme, and special rules regulating foreign banks. Similarities are rooted in the underlying rationale for regulation, crisis exposure, external pressure through international harmonising efforts and standards, as well as China’s deliberate transplanting of Western models into its domestic banking regulation.