The formation of a single legal space as a prerequisite for overcoming systemic risk

Abstract

This article examines the concept of systemic risk, its fundamental origins and the dangers of systemic risk in a given state in relation to other countries of the world. Methods for minimizing systemic risks in the contemporary world are looked at, with special attention given to the idea of constructing a single legal framework to address systemic risk. The problem of 'soft law', along with its pros and cons, is discussed and a parallel is drawn with the European legislation in the field of norms standardization. This article discusses transition economics as a source of systemic risk. Data from the Russian Federation and EU countries are given as examples. The main findings stress the need to adapt international standards to national legislation, and emphasize the need for forecasting, the creation of countercyclical capital buffers, the need to combine the use of macro-prudential approaches with monetary policy, and the necessity to regulate institutional structure. It should also be noted, that all government policy, especially monetary, fiscal, and macro-and micro-prudential (supplemented by specific supervision), should be a part of a permanent system of macro-financial stability, created to predict financial crises. The economic crisis has shown that financial stability cannot be guaranteed by each country independently. This is necessary, but not sufficient. The strong economic interdependence of countries in the framework of globalization cannot be excluded from the equation.