Emily Lee on Digitalization and Tokenization of Money: Exploring Central Bank Digital Currency Theories and Retail CBDC Developments in China (BFLR)

"Digitalization and Tokenization of Money: Exploring Central Bank Digital Currency Theories and Retail CBDC Developments in China"
Emily Lee
Banking and Finance Law Review, Vol. 41 No. 2, May 2025, pp. 271–300
Published in May 2025

Abstract: Central bank digital currencies (CBDCs) promote financial stability, inclusion and innovation in the digital economy. This article explores and reconceptualizes business management theories to enhance the understanding and characterization of CBDCs. From a theoretical standpoint, the governance, design principles and implementation of CBDCs align with institutional theory, stakeholder theory, technological innovation theory and open innovation theory. The interplay of these theories contributes to a comprehensive understanding of the interactions between CBDC stakeholders and the extensive array of opportunities and challenges presented by CBDCs. The theoretical frameworks are complemented by an examination of central banking legislation and monetary policy, as well as the potential impact on banking law and payment system regulations due to CBDC implementation, considering the significance of existing payment operators in facilitating CBDC distribution. In affording sufficient protection and in the interests of CBDC users, relevant issues in property law, data protection and privacy law are also considered. This article focuses on retail CBDCs, specifically China’s digital currency (e-CNY). As China’s central bank intends to cooperate with the G20 and other international organizations, e-CNY’s cross-border payments could have implications for monetary sovereignty, foreign exchange policies and regulatory compliance. China’s early e-CNY adoption serves as a vital case study for global central banks: CBDCs will likely have regulatory standards that reflect existing financial infrastructures and the ongoing US-China currency competition. This article aims to enhance understanding of legal challenges and practical concerns related to retail CBDCs, covering e-CNY’s core design features, CBDC’s impacts on existing laws, potential regulatory conflicts and competitiveness with existing payment systems. The article posits that account-based CBDCs can be considered a form of book money and can conform to the existing legal framework. Conversely, incorporating CBDCs into the present payment system necessitates recognizing token-based CBDCs as official payment methods, potentially requiring adjustments to pertinent legislation.

Full text of this article is available on SSRN, please click here.

Emily Lee on Advancing Digital Economy and Financial Inclusion through Central Bank Digital Currencies (African Journal of International and Comparative Law)

"Advancing Digital Economy and Financial Inclusion through Central Bank Digital Currencies: A Comprehensive Analysis of Policies and Legal Implications through e-CNY and eNaira"
Emily Lee
African Journal of International and Comparative Law, Volume 33, Issue 1, February, 2025, pp. 1–28
Published online: February 2025

Abstract: This article explores the implementation of Central Bank Digital Currencies (CBDCs) as a proactive measure by central banks to achieve policy objectives such as financial inclusion, data and privacy governance and economic growth in the digital economy. The design concepts of e-CNY and eNaira, the two primary retail CBDC prototypes discussed herein, are shaped by these objectives.

The analysis focuses on regulatory policies, risks and legal implications associated with the shift from conventional digital payments to CBDC payments, using e-CNY and eNaira as case studies. It discusses CBDC’s competitiveness and interoperability within the current payment landscape and other regulatory concerns, such as data and personal privacy, CBDC interface providers’ performance and scalability, cybersecurity, compliance for anti-money laundering regulations and the operational robustness and resilience of payment systems.

By examining these issues and challenges, the article aims to provide a comprehensive understanding of the potential benefits and challenges associated with CBDC implementation. The insights drawn from the e-CNY and eNaira implementations can provide food for thought for governments that wish to work towards implementing secure and user-friendly CBDCs that coexist with traditional financial intermediaries while offering enhanced payment capabilities.

Emily Lee on Mutual Recognition and Assistance in Insolvency Proceedings across Mainland China and Hong Kong (Journal of Corporate Law Studies)

"The cooperation mechanism and legal harmonisation: analysing the past, present and future of mutual recognition and assistance in insolvency proceedings across Mainland China and Hong Kong, with insights from EU insolvency regulations"

Emily Lee

Journal of Corporate Law Studies

Published online: 26 May 2023

Abstract: This article examines the potential and challenges of the ‘Cooperation Mechanism’, a scheme introduced jointly by the Supreme People’s Court in China and the Government of the Hong Kong Special Administrative Region on 14 May 2021, for enhancing mutual recognition and assistance in insolvency proceedings. This article contends that the Cooperation Mechanism does not in itself constitute a formal mechanism for mutual recognition. To assess the impact of the Cooperation Mechanism, this article traces and analyses court decisions on recognition and assistance made before the implementation of the Cooperation Mechanism, and places them in contrast to those pursuant to or influenced by the Cooperation Mechanism. Additionally, it highlights a similar practice between Europe’s Brussels Convention of 1968 and two arrangements between Hong Kong and China prior to the Cooperation Mechanism, namely the 2006 Arrangement and the 2019 Arrangement, in carving out bankruptcy and insolvency proceedings, notwithstanding some technical differences.

Emily Lee on De-risking Practices in Hong Kong and Technological Responses (Common Law World Review)

"Technology-driven solutions to banks’ de-risking practices in Hong Kong: FinTech and blockchain-based smart contracts for financial inclusion"
Emily Lee
Common Law World Review, 
Published on 18 May 2022

Abstract:   This article examines banks’ de-risking practices inside Hong Kong's Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime, a problem that has created considerable tension between the demands of AML/CFT prevention and those of financial inclusion. It unravels the public policy tensions stemming from a multitude of financial reform causes, namely the facilitation of AML/CFT regulatory compliance, the promotion of financial technology (FinTech) innovation and an ultimate expansion in financial inclusion. The article argues that tiered account services are an important first step towards financial inclusion, culminating in the introduction of simple bank accounts by some banks to mitigate the effect of de-risking. While proposed solutions such as the know-your-client utility system and central data repository may contribute to a digital financial inclusion framework, they are not tailored to solve a specific problem (de-risking). The article therefore proposes and evaluates whether FinTech and blockchain-based smart contracts qualify as alternative solutions to de-risking. The article aims to address those policy tensions and contribute to the regulatory policy formulation and the rule-making for financial law and regulation intended to facilitate financial inclusion.

AIIFL Newsletter Issue 5 (June 2021)

In this AIIFL News, we highlight a range of publications and activities from the AIIFL team as well as introducing the new AIIFL website.
      Over the past year, the role of digital communications and interactions has increased dramatically, including here at AIIFL. We have thus taken the opportunity to refocus our efforts and digital reach, not only with this new website but with an increasing range of online events and expansion of our communications channels, including LinkedIn, Twitter and Facebook.
     Taking adventure of this, I would like to share with you a photo for our first online meeting with the AIIFL Academic Advisory Board (AAB) and Professional Advisory Board (PAB) on 28th June 2021 attended by (from top left to right): Professor George Walker (AAB), Professor Douglas Arner (AIIFL Director), Yong Kai Wong (PAB), Kenneth Ng (PAB), Jeffrey Chen (PAB), Stefan Gannon (Vice Chairman, PAB), Evan Gibson (AIIFL Research), Professor Charles Booth (Vice Chairman, AAB), Professor Mark Roe (AAB), Professor Mads Andenas (AAB), Hon Mr Justice William Blair (AAB), Professor Ruth Plato-Shinar (AAB), Professor Steven Schwarcz (AAB), Professor Ian Ramsay (AAB), Dr Michael Taylor (AAB), Dr Arthur McInnis (AAB), Martin Lister (PAB), Sou Chiam (PAB), Professor Benjamin Geva (AAB), Professor Rolf H. Weber (AAB), Professor Sarah Worthington (AAB), Flora Leung (AIIFL Secretary), Susie Cheung (PAB), Mohan Datwani (PAB), and Yun Zhao (Board of Management).  Professor Richard Cullen (Board of Management), Professor John Lowry (AAB) and Professor Dan Prentice (AAB) are not visible but present.
     

The 2019-2020 academic year was the twentieth anniversary of AIIFL.  While we were unable to hold live events in Hong Kong, we did take the opportunity to take stock of our performance over the past 20 years, summarised in the 2019-2020 AIIFL Annual Report for AIIFL’s 20^th Anniversary.  During that period AIIFL and its Fellows have had impressive output, impact and reach.

My current term as Director of AIIFL will finish at the end of June and I would especially like to take the opportunity to thank you for your continuing support to the Institute and welcome Dr Emily Lee as AIIFL Director from 1 July 2021.  I would very much like to thank the entire AIIFL team, particularly Flora Leung (without whom nothing here happens) and Evan Gibson (AIIFL Assistant Research Officer), picture left.

 


I may be reached anytime via email (douglas.arner@hku.hk) or via LinkedIn.

Douglas Arner

AIIFL Director
(2003-2011, 2019-2021)

HIGHLIGHTS

New AIIFL Website

The new AIIFL website (www.AIIFL.com) highlights the key themes and issues driving global finance today: regulation, technology, sustainability, globalisation, fragmentation. 
     There are a range of short videos across the site, with the co-founders of AIIFL as well as the Convenors of the Research Programmes, sharing the history of the Institute as well as our strategic research directions.  We hope that the new website is useful and informative.

UN Dialogue on Global Digital Finance Governance

The first set of reports from the UN Dialogue on Global Digital Finance Governance has been launched. A team from AIIFL including Sangita Gazi, Kuzi Charamba, Artem Sergeev and Douglas Arner along with Dirk Zetzsche (University of Luxembourg) and Ross Buckley (UNSW Australia) has worked closely with the Dialogue over the past year, including leading on 3 of the 8 of the reports:

Summary Paper: BigFintechs and Sustainability: A Necessary Convergence

Technical Paper 1.1: BigFintechs and their impacts on sustainable development

Technical Paper 1.1B: BigFintechs and their impacts on macroeconomic policies

Technical Paper 1.2: Digital currencies and CBDC impacts on Least Developed Countries

Technical Paper 2.1: BigFintechs and the UN SDGs: the role of corporate governance innovations

Technical Paper 3.1: Policymakers, BigFintechs and the United Nations SDGs

Technical Paper 3.2: BigFintechs and international governance, policymaking and the UN SDGs: the SDGs in the international governance of finance

Technical Paper 3.3: A principles-based approach to the governance of BigFintech

All papers are available HERE.

 Looking Back Looking Forward: Regulatory Technology After COVID-19

In the episode 4 of Looking Back Looking Forward, Douglas Arner discusses the implications of COVID-19 for RegTech and SupTech: the use of technology for regulatory and supervisory purposes. Non-face-to-face interactions due to lockdowns and other COVID-19 measures have allowed the pursuance of digital reporting and analytics to not only create efficiency but also achieve regulatory and supervisory objectives for financial systems to support sustainable development more broadly.

Watch it HERE

All the episodes of Looking Back Looking forward are available at FinTech Videos Library of the HKU FinTech website.

PUBLICATIONS AND REPORTS

Hong Kong's Housing Crisis - An Underlying Factor in the 2019 Riots

Richard Cullen

The Cost of Ambition: Biden's Plan to Rebuild the American Dream Sidesteps Concerns Over Its Huge Price Tag

Richard Cullen

LITE (Law, Innovation, Technology and Entrepreneurship) Lab is using digital tools to increase access to justice, help start-ups navigate legal affairs, and train students in legal technology

Brian Tang

AWARDS AND IMPACTS

LITE (Law, Innovation, Technology and Entrepreneurship) Lab students as Project Team of ProperT was selected as the InnoShow award winner at the 4th Engineering InnoShow for a computer vision tool to assist low income tenants protect against health and safety hazards.

Syren Johnstone appointed as one of the Curators who act as the Managing Editors of the RegTrax repository.  The Curators are recognized experts in their jurisdictions, and oversee the information that’s being added to ensure accuracy. They are charged with reviewing the research done by its network of contributors (as well as any regulations offered from the public), and ensuring the accuracy of the regulation, source, and conclusions.

LITE Lab students nominated for Financial Times Innovative Lawyer Collaborative Lawyer Award on Wanted: Role Models for Solving Legal Problems Together

SELECTED MEDIA

FRT Episode 98: The Platformization of Finance

Douglas Arner discussed with Brad Carr the experiences with China’s FinTech platforms.

Interview on the Future of Legal

Innovation in Asia

Press Release on Covid-19 Catalysing

the Rapid Growth of Asia Pacific

Regtech Sector

 Brian Tang

Central Bank Digital Currency (CBDC)

Part 2

Douglas Arnershared his views on

Libra’s challenges to world currencies

Rethinking Economics NL for Interview-Series on Economy of 21st Century

Douglas Arner, Dan Azzi and Navroop Sahdev discussed finance and complexity theory in the 21st Century

EVENTS AND ACTIVITIES

Upcoming Events 

13 July 2021

Chen Lin will present Financial Volatility and Digital Finance at the HKU-SCF FinTech Academy’s Research Seminar Series       Details

30 June 2021

Brian Tang presents Unlocking the Power of Regtech at the Hong Kong Monetary Authority (HKMA)      Details

Giuliano G. Castellano presented Secured Lending: Coordinating Law Reforms and Regulatory Policies at the European Central Bank (ECB) on 23 June 2021. The discussion was based on his research recently published on “Commercial Law Intersections” as well as on his contribution to the activities of the International Finance Corporation (IFC) of the World Bank Group.

Douglas Arner presented at the Symposium on Technology and New Finance in the Digital Era on 25 May 2021        Watch it HERE

Douglas Arner presented at Regulation of AI in the financial sector: crossed perspectives in Asia and Europe on 17 May 2021

Papers and Video are available HERE

Syren Johnstone on Asia Segment on Cryptoassets at the Stanford Law School in April 2021      Watch it HERE

Member of the AIIFL Professional Advisory Board and Partner of Dentons Hong Kong, Jeffrey H. Chen, presented a webinar "Anatomy of Structured Products" on 14 October 2020       Watch it HERE

Brian Tang on behalf of the LITE (Law, Innovation, Technology and Entrepreneurship) Lab presented at the 2021 Global Law Lab Showcase & Meetup on 12 May 2021

Brian Tang on LegalTech Innovation Conference with fellow authors of The LEGALTECH Book on “Global Business of LegalTech: Founder’s Perspectives” on 13 May 2021        Watch it HERE

Brian Tang served as Judge and Speaker on Hong Kong Startups Meet MNCs – LegalTech organised by American Chamber of Commerce in Hong Kong on 6 May 2021

JOIN US

We are seeking to expand our world leading team in the area of FinTech, RegTech and Digital Finance.

Post-Doctoral Fellow in Finance, Technology and Regulation

Applications close: 31 July 2021, HK Time

More details and online application are available HERE

 

Research Assistant Professor in FinTech / RegTech

Applications close: 30 June 2021, HK Time

More details and online application are available HERE

The HKU-Standard Chartered Foundation FinTech Academy, with the aim to cultivate interdisciplinary research in FinTech, has established a Research Assistant Professor Scheme.

Emily Lee on Digital Financial Inclusion: Observations and Insights from Hong Kong's Virtual Banks (Law and Contemporary Problems)

"Digital Financial Inclusion: Observations and Insights from Hong Kong's Virtual Banks"

Emily Lee
Law and Contemporary Problems
2021, Issue 84, pp. 95-113

Abstract: This Article examines issues affecting virtual banks, specifically those issues related to the financial technology (fintech) disruption and dealing with alternative banking and finance. It covers an expansive interpretation of Hong Kong regulatory law regarding the requirements for the authorization of virtual banks, with an accompanying study and critique of the financial industry’s collection and storage of digital data in relation to privacy, drawing inspiration from international norms. It then discusses those regulations in terms of their effect on digital financial inclusion. Finally, it evaluates some potential challenges facing fintech lenders, virtual banks included, in a regulatory environment that promotes digital financial inclusion while seeking to manage financial consumerism. This Article adds to the literatures of banking, finance, information technology management, and consumer protection law enforcement by analyzing the latest digital financial inclusion developments in Hong Kong, following the Hong Kong Monetary Authority’s (HKMA) issuing of virtual bank licenses in 2019 in an effort to promote financial inclusion and fintech innovation.

     This Article focuses on the connection between financial inclusion and digital financial inclusion as it assesses the role of virtual banks in Hong Kong’s financial inclusion agenda because this connection may be key to virtual banks’ success. This Article undertakes the original contribution of examining why Hong Kong’s inflexible capital requirement, unclear demands on digital banking innovation, and outdated laws against technical risks may render its financial inclusion policy less effective.

Emily Lee on Financial Inclusion and Bank Account Opening in Hong Kong (HK Lawyer)

"Financial Inclusion and Bank Account Opening in Hong Kong"

Emily Lee

Hong Kong Lawyer

10 July 2020

Abstract: Financial inclusion denotes banks’ provision of basic financial services at affordable costs to those that need and qualify for them. The opposite is financial exclusion, which is when banks deny financial services to customers that they consider as posing high risks for money laundering and terrorist financing, giving rise to the term “de-risking” or “de-banking”. A litany of financial exclusion reports impelled the Hong Kong Money Authority (HKMA) to issue a circular to banks warning against their practices of de-risking on 8 September 2016. Since then, financial inclusion has become a topic of public interests. The article contains nuanced analyses on the “Bank Account Opening Survey”, first published by the Hong Kong Institute of Chartered Secretaries (HKICS) in September 2016. Thereafter, the HKMA established a dedicated webpage on the topic of bank account opening. The HKICS also conducted a second survey on bank account opening that was published in July 2018. As a result, comments on the HKICS’ bank account opening surveys will consist of two separate parts, as provided below, which are intended to complement each other.  Click here to read the full article.

Emily Lee & Eric Ip on Judicial Diplomacy in the Asia-Pacific and the Singapore-initiated Transnational Judicial Insolvency Network (J Corp L Studies)

"Judicial diplomacy in the Asia-Pacific: theory and evidence from the Singapore-initiated transnational judicial insolvency network"

Emily Lee & Eric C. Ip

Journal of Corporate Law Studies 

Published online on 9 Jan 2020

Abstract: The promulgation of the Judicial Insolvency Network (JIN) Guidelines by the Supreme Court of Singapore in 2017 has triggered innovative cross-border insolvency developments in the Asia-Pacific. It is intriguing that the Guidelines were conceived not by Singaporean judges alone, but jointly with a transnational network of bankruptcy judges. This article undertakes the original contribution of examining the Guidelines in light of the overall need for participating jurisdictions to craft a transnational insolvency framework. It uses Hong Kong as a test case to illustrate trends of likely future convergence.

Emily Lee on Equity Crowdfunding in Hong Kong (J Corp L Studies)

"Equity crowdfunding in Hong Kong: potential, challenges and investor protection"
Emily Lee
The Journal of Corporate Law Studies
July 18 2018, published online

Abstract: Equity crowdfunding is a relatively new investment format that allows investors to purchase unlisted securities from a company that does not meet listing requirements for an initial public offering. Equity crowdfunding offers investment rewards but also has risks of fraud, herding, insolvency and dilution of shareholder equity. Regulation is a natural response to negative externalities like systemic risk caused by asymmetric information, adverse selection and lemon problems. While the US and the UK have extensive crowdfunding regulations, Hong Kong does not, although crowdfunding is not specifically banned under the Securities and Futures Ordinance. This article focuses on the current state of equity crowdfunding in Hong Kong but draws inspiration from legal requirements for equity crowdfunding in the US, the UK and Singapore, as well as the Korea Startup Market in South Korea. The author makes regulatory suggestions for consideration by Hong Kong’s law-makers and policy-makers.

New Issue: SSRN Legal Studies Research Paper Series (HKU)

UNIVERSITY OF HONG KONG FACULTY OF LAW LEGAL STUDIES RESEARCH PAPER SERIES 

DOUGLAS W. ARNER, EDITOR

SIMON N. M. YOUNG, EDITOR

Vol. 7, No. 6: Sep 19, 2017 

Table of Contents

1. The Distributed Liability of Distributed Ledgers: Legal Risks of Blockchain Dirk A. Zetzsche, ADA Chair in Financial Law / Inclusive Finance, University of Luxembourg, Heinrich Heine University Duesseldorf - Faculty of Law - Center for Business & Corporate Law (CBC) Ross P. Buckley, University of New South Wales (UNSW) - Faculty of Law Douglas W. Arner, University of Hong Kong - Faculty of Law 2.Financial Inclusion: A Challenge to the New Paradigm of Financial Technology, Regulatory Technology and Anti-Money Laundering Law Emily Lee, The University of Hong Kong - Faculty of Law 3. Hong Kong's Judiciary Under ‘One Country, TwoSystems’ Albert H. Y. Chen, The University of Hong Kong - Faculty of Law P. Y. Lo, The University of Hong Kong

HKU Law Faculty Success in CPU's Public Policy Research Funding Scheme 2017-18 (Third Round)

Congratulations to Emily Lee who was awarded a Public Policy Research Grant in the 2017-18 (Third Round) by the Central Policy Unit. The project, titled "Financial Inclusion and Bank Account Opening: Deploying Financial Technology and Regulatory Technology for Improving Banking Services Accessibility Inside Hong Kong’s Anti-Money Laundering Law", was awarded $295,550 in funding over 18 months.  

     In addition, Puja Kapai is Co-Investigator in another successful Public Policy Research grant awarded to Professor Karen Laidler of the Department of Sociology. The project, titled "Opening Doors, Creating Pathways - A Qualitative Study of Social Harms and Service Access of Young People from Ethnic Minority Backgrounds in Hong Kong", was awarded $400,000 over 14 months.  

Emily Lee on Financial Inclusion, FinTech, RegTech & AML (J Business Law)

"Financial Inclusion: a Challenge to the New Paradigm of Financial Technology, Regulatory Technology and Anti-Money Laundering Law"

Emily Lee

Journal of Business Law

2017, Issue 6, published, pp 473-498

Abstract: This article evaluates the claim that FinTech—a portmanteau of finance and technology, including blockchain and automated suspicious transaction monitoring technology systems—has the ability to revolutionise financial inclusion, and examines whether regulatory technology (RegTech) can be used by regulators for tracking and monitoring AML/CFT compliance activities.

     Introduction: Financial inclusion denotes banks’ provision of basic financial services at affordable costs to those that need and qualify for them. Financial inclusion has strong social and economic implications. Access to basic financial services has been recognised as a basic civil right by the European Accessibility Act. The opposite is financial exclusion, which is when banks deny financial services to customers that they consider as posing high risks for money laundering and terrorist financing, giving rise to the term “de-risking”. 

     A litany of financial exclusion reports impelled the Hong Kong Money Authority (HKMA), the territory’s banking regulator, on 8 September 2016, to issue a circular to banks warning against the practice of de-risking, excluding customers from the financial system as the territory’s banks attempt to meet the anti-money laundering/countering the financing of terrorism (AML/CFT) requirements. Financial exclusion is driven by increasingly stringent documentary requirements and/or banks’ fear of regulatory reprisals if customers cannot prove the legality of their income or source of funds to their banks’ satisfaction. In over-compensating, banks have refused to approve account opening applications from some customer groups, with small and medium-sized enterprises (SMEs) and start-up companies (start-ups) being most affected... 

     This article addresses the following key issues: (1) the importance of financial inclusion since it has strong social and economic implications; (2) the claim that FinTech enables financial inclusion; (3) the problem of financial exclusion, which is linked to AML/CFT requirements; and consequently considers (4) whether the AML/CFT requirements are suitable to be put into a regulatory sandbox, a new regulatory approach whereby innovative FinTech products or services will be provided with regulatory flexibility for them to be introduced and tested in the market, and, if not, whether there is an alternative approach to grant regulatory flexibility so as to make financial services more accessible—the essence of financial inclusion...  Download the full paper here. 

Emily Lee on FIFA and Money Laundering Reform in Hong Kong (PekingULJ)

"Will the FIFA bribery scandal spur money laundering law reform in Hong Kong?"

Emily Lee
Peking University Law Journal
2016, Vol. 4, Issue 1, pp. 143-176

Abstract: The article first explains why the anti-money laundering (AML) regime in Hong Kong concerns cross-discipline and cross-jurisdiction issues. The author uses the recent money laundering scandal involving The Fédération Internationale de Football Association (FIFA) members as an opportunity to assess the Financial Action Task Force (FATF) Recommendations on politically exposed persons (PEPs). The FIFA scandal involved financial institutions acting as intermediaries in facilitating the PEPs’ money laundering activities. Given financial institutions’ knowing or unknowing involvement in the scandal, there appears to be significant gaps in financial institutions’ ‘know your clients’ (KYC) due diligence process. The article warns that regulation on this issue is fragmented and inconsistent, as evidenced by how the risk-based approach recommended by the FATF is not observed in every jurisdiction. The article then examines the anti-money laundering regime in Hong Kong, one of the world’s main financial centres, by examining its various legislation and comparing them with the FATF Recommendations. Lastly, the article suggests improvements to Hong Kong’s AML legislation and the FATF Recommendations which are essentially a set of global AML standards. The article then explores ways to better implement the FATF Recommendations in jurisdictions that have adopted them, especially those which host the world’s financial centres.  Click here to download the full article.

Emily Lee on China's Shadow Banking System after the Global Financial Crisis (PekingULJ)

"Shadow Banking System in China after the Global Financial Crisis"
Emily Lee
Peking University Law Journal
March 2016, Vol. 3, Issue 2, pp 362-384

Abstract: This article first examines the composition of the shadow banking system in China and then critically analyses its interconnectivity with the traditional banking system and global capital markets. It argues that whilst shadow bank lending in China contributes to the country's economic growth, the normal functionality of capital markets could be impaired if shadow banks continue to operate on a high-risk/high-yield business model which could potentially pose a systemic risk. It also addresses the concerns arising from high-leverage shadow bank lending practice and cautions against shadow banks operating in a black hole area that enables them to escape from regulatory purview. The article suggests that future regulatory (law) reform should guide shadow banks towards consumer protection by establishing an effective internal control system, enabling sufficient risk controls and requiring material information disclosure; towards safeguarding capital markets; and towards reducing their high levels of leverage. Contact the author for a copy.

New Issue: SSRN Legal Studies Research Paper Series (HKU)

Vol. 5, No. 8: 28 September 2015

Table of Contents

1. Role of the Criminal Law in Maintaining Hong Kong as an International Financial Centre
Simon N. M. Young, The University of Hong Kong - Faculty of Law

2. Problems of Judicial Recognition and Enforcement in Cross-Border Insolvency Matters between Hong Kong and Mainland China
Emily Lee, The University of Hong Kong - Faculty of Law

3. Sentencing
Simon N. M. Young, The University of Hong Kong - Faculty of Law

4. Judicial Review of Elections in Hong Kong: Resolving a Contradiction
Simon N. M. Young, The University of Hong Kong - Faculty of Law

5. Rethinking the Process of Political Reform in Hong Kong
Simon N. M. Young, The University of Hong Kong - Faculty of Law

6. Mediation in China: Towards a Modernised and Harmonised Framework for International Commercial Mediation
A. K. C. Koo, The University of Hong Kong - Faculty of Law

7. Ten Years after Halsey
A. K. C. Koo, The University of Hong Kong - Faculty of Law

8. Human Rights, the Rule of Law and Democracy: Recent Experience of Hong Kong and China
Johannes M M Chan, The University of Hong Kong - Faculty of Law

New Issue: SSRN Legal Studies Research Paper Series (HKU)

Vol. 5, No. 7: 25 August 2015

Table of Contents

1. The Basic Law, Universal Suffrage and the Rule of Law in Hong Kong

Michael C. Davis, The University of Hong Kong - Faculty of Law

2. Shadow Banking System in China after the Global Financial Crisis: Why Shadow Banks Can Distort the Capital Market Order

Emily Lee, The University of Hong Kong - Faculty of Law

3. Professional Legal Education Reviews: Too Many 'What's', Too Few 'How's'

Wilson Chow, The University of Hong Kong - Faculty of Law

Firew Kebede Tiba, Lecturer in Law, Deakin University School of Law, Melbourne, Australia

Emily Lee on Cross-Border Insolvency Matters (Am J of Comp Law)

"Problems of Judicial Recognition and Enforcement in Cross-Border Insolvency Matters Between Hong Kong and Mainland China"
Emily Lee
American Journal of Comparative Law
2015, Vol. 63(2), pp. 439-465

Abstract: This article first explores whether it is legally possible to extend the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned to cover cross-border insolvency matters between Hong Kong and mainland China and, if so, the advantages and disadvantages of so doing. It then examines other alternatives for facilitating judicial recognition and enforcement of judgments between the courts in Hong Kong and mainland China that focus specifically on cross-border insolvency judgments (including court orders) that concern both Hong Kong and mainland China, such as signing a new arrangement, a special treaty, or a Memorandum of Understanding. It seeks to highlight the defi- ciencies of the Arrangement as well as discuss the options to remedy those deficiencies. The situation for Hong Kong–China cross-border insolvency cases is opaque due to the lack of local cross-border insolvency legislation in Hong Kong. In China, there is only one article (article 5) of the 2006 Enterprise Bankruptcy Law that concerns cross-border insolvency, but that article is inapplicable to Hong Kong–China cross-border insolvency cases. That article is inapplicable because it applies only to cross-border insolvency cases involving a foreign state. Since Hong Kong is not a foreign state, it is precluded from the article’s application. Also, Hong Kong and China have not adopted the UNCITRAL Model Law on Cross-Border Insolvency. Although internationally accepted soft law standards such as the Model Law can provide institutional guidance to cross-border insolvency matters, it is compatible with Hong Kong–China cross-border insolvency cases only when a third jurisdiction is involved. The lack of a formal judicial recognition mechanism for Hong Kong-China cross- border insolvency judgments creates problems such as legal uncertainty and forum shopping. This article aims to raise awareness of the difficulties facing practitioners involved in Hong Kong–China cross- border insolvency cases and to share academic perspectives on the issue.  Click here to download the full paper from SSRN.

New Issue: SSRN Legal Studies Research Paper Series (HKU)

Vol. 5, No. 5: 24 June 2015

Table of Contents

1. Legal Pluralism, Institutionalism, and Judicial Recognition of Hong Kong-China Cross-Border Insolvency Judgments
Emily Lee, The University of Hong Kong - Faculty of Law

2. The Evolution of Relational Property Rights: A Case of Chinese Rural Land Reform
Shitong Qiao, University of Hong Kong Faculty of Law
Frank K. Upham, New York University School of Law

3. What Determines M&A Legal and Financial Advisors’ Competitiveness in an International Financial Centre: Using China's Going Out Policy as a Natural Experiment
Bryane Michael, University of Hong Kong Faculty of Law, University of Oxford
Dariusz Wojcik, University of Oxford, St. Peter's College
Douglas W. Arner, University of Hong Kong - Faculty of Law
Chen Lin, The University of Hong Kong - Faculty of Business and Economics
Wilson H.S. Tong, Hong Kong Polytechnic University - School of Accounting and Finance, Hong Kong University of Science & Technology (HKUST) - Department of Finance
Simon X. Zhao, The University of Hong Kong - Department of Geography

4. Defaming by Suggestion: Searching for Search Engine Liability in the Autocomplete Era
Anne S. Y. Cheung, The University of Hong Kong - Faculty of Law

5. Trade Finance in East Asia: Potential Responses to the Shortfall
Ross P. Buckley, University of New South Wales (UNSW) - Faculty of Law
Douglas W. Arner, University of Hong Kong - Faculty of Law
Rebecca Stanley, University of New South Wales (UNSW) - Faculty of Law