EU REFORM OF FINANCIAL REGULATION – THE ROLE OF LAW WITHIN CONTEMPORARY FINANCIAL MARKETS

In the last decades there has been a radical change in the conceptual basis of European financial markets – intellectual and legal structures have taken the lead within modern finances. EU Member States have redefined the role of law within financial markets due to innovative use of traditional legal structures, such as contracts, and to the reform of financial rules which fostered market development and liquidity of assets. In line with the EU trend of developing more market-oriented systems, as opposed to the traditionally bank-oriented ones, greater dynamics is also seen on the Croatian financial market. Indeed, market developments and market activity are the best guidelines for structuring an adequate regulatory framework – with greater weight being put on capital markets where
new legislation should foster the efficiency of composite financial transactions, together with overall system stability. In that regard, EU financial regulation and financial integration are clear guidelines for Croatia’s financial system reform during accession. The transposition of EU financial regulation is significant for Croatia, as this will promote a new conceptual, theoretical stance within Croatian financial theory – the acknowledgment of the interdisciplinary character of financial regulation, its purely legal structure and inherent economic purpose. Whilst law reform cannot kick start market development per se, it is nevertheless an effective instrument for achieving soundness of transactions and market
efficiency. Regardless to all of the above, there are not many scientific or professional papers in Croatia covering this issue from an interdisciplinary perspective. In that regard it is appropriate for Croatia to turn to the recent EU experience of regulatory reform and
its impact on financial markets.