"Rechtliche Rahmenbedingungen erfordern ökonomischen Sachverstand" - IMFS-Professor Roland Broemel im Interview

Seit dem vergangenen Jahr hält Prof. Roland Broemel am IMFS den Lehrstuhl für Öffentliches Recht, Wirtschafts- und Währungsrecht, Finanzmarktregulierung und Rechtstheorie inne. In einem Interview beschreibt er seine aktuellen Forschungsschwerpunkte sowie die juristischen Herausforderungen in der Finanzmarktregulierung und der Digitalisierung. Das Interview ist auf Englisch im IMFS-Jahresbericht 2018 erschienen.

Which questions are you currently working on?

My current research projects concern, among other topics, the legal framework of the European System of Central Banks, for instance the consequences of the economic uncertainty for the judicial review of monetary measures or institutional and procedural aspects of the European regime of monetary policy and banking supervision.

Moreover, my research focuses on the legal consequences of big data and artificial intelligence in financial services, e.g. questions of legal accountability for algorithm-based decisions, the appropriate governance design to detect biases in algorithmic assessments and recommendations, or the necessary legal adaptions to cope with new forms of systemic risks. Some supervisory authorities follow a flexible approach offering regulatory sandboxes under certain circumstances. Those innovative, pragmatic ways of dealing with regulatory uncertainty brings up a series of legal questions on both the national and the European level.

What does the IMFS’s interdisciplinary approach of legal and economic research mean for your work?

Establishing an appropriate legal framework for the supervision of financial markets requires a sound economic analysis of what is going on. The legal assessment of monetary measures of the ECB essentially depends on an economic explanation of monetary transmission mechanisms – their functioning, the different effects of monetary measures, and, last but not least, the level of model uncertainty. Furthermore, the need for regulation and supervision arising from algorithmic decision-making relies on an economic description of their effects on market structures and the corresponding new systemic risks.

In your research, you also focus on financial regulation. How do you assess the current state of financial supervision in the EU?

In terms of ensuring financial stability and macroprudential supervision, a lot has been achieved within the last years to establish a more coherent and effective regime within the European Union. However, the discussion on the first judgement of the European General Court concerning certain aspects of the SSM shows that a lot of questions remain up to debate. Besides, when it comes to the consequences of the digitalization, authorities of the financial sector like Bundesbank and BaFin undertake conceptual research that competition authorities like the Bundeskartellamt already initiated two years ago.

In your courses you address the legal aspects of big data in and digitalization, especially in financial regulation. What are the major challenges in your opinion?

A series of business models in the financial world is currently undergoing profound technological and structural changes. As in other branches, the use of artificial intelligence and big data applications may lead to significant competitive advantages. Some innovative applications increase the effectiveness and efficiency of financial services. Other applications render financial services more comfortable and are basically offered to acquire more data on payment transactions which can be used in other contexts.

One of the major challenges might be to characterize the data-driven business models and the evolving market structures in order to better get aware of new systemic risks and of biases in algorithmic decision-making processes. On that basis, legal instruments could be conceptualized to ensure an appropriate level of accountability as well as an effective supervision that creates a level playing field for both traditional financial institutes and fintechs. Finally, such a regulatory regime is to address new issues of consumer protection.