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The International Lawyer

The International Lawyer, Volume 55, Number 1, 2022

Endogenous, Exogenous and Existential Risk - New Global Solutions

George A Walker


  • Financial markets are complex adaptive systems with society being made up of multiple layers of interconnected and overlapping systems.
  • Modern technology has supplemented this with the creation of digital systems within this larger aggregation with special features and operations.
  • All systems are subject to internal, or endogenous, and external, or exogenous, threats and exposures.
  • Specific issues arise regarding Financial Technology (FinTech) and associated Regulatory Technology (RegTech) as well as other forms of new technology (NewTech or FutureTech).
Endogenous, Exogenous and Existential Risk - New Global Solutions
Peter Dazeley via Getty Images

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I. Endogenous, Exogenous and Existential Risk

Financial markets are complex adaptive systems with society being made up of multiple layers of interconnected and overlapping systems. Modern technology has supplemented this with the creation of digital systems within this larger aggregation with special features and operations. All systems are subject to internal, or endogenous, and external, or exogenous, threats and exposures. Specific issues arise regarding Financial Technology (FinTech) and associated Regulatory Technology (RegTech) as well as other forms of new technology (NewTech or FutureTech). Recent technological innovation, such as with the potential emergence of new, large circulation global digital coins (supercoins) or internet-based software applications (superapps), have further challenged the boundaries of traditional legacy regulation. While many regulatory systems were strengthened following the global financial crisis, societies are still susceptible to larger exogenous threats, including continuing viral pandemics, natural disasters (earthquakes and tsunami), climatic impacts (floods and droughts), infrastructure (including cyber threats), technological risk, and warfare. The Coronavirus 2020–2021 crisis stretched national and international control regimes to the limit. New total global short and long-term solutions must be constructed with a new architecture erected to protect the resilience of all markets and systems, economies and societies more generally from internal, and endogenous, as well as external, and exogenous, shocks or threats on a continuing basis.

The opportunity can also be taken to develop several recommendations for the construction of a larger new ‘sustainable, managed, adaptive, recurrent and targeted’ (smart) framework using ‘socially, managed, adaptive, regulatory and technology’ (smart) tools. This would build a series of integrated ‘Social, Market, Atmospheric (Climatic), Regulatory, Technology and Security’ (SMART or SMARTS) and Society, Trade, Atmospheric, Regulatory, Technology and Safety (START or STARTS) agenda. This would be given effect to through a ‘Global Investment, Finance and Trade’ (GIFT) Treaty which would operate as a type of post-global financial crisis and post-Coronavirus crisis ‘Bretton Woods III’ Treaty reference system. This could be supported by a ‘Global Reciprocal Economic Area Treaty’ (GREAT) which could form the basis for a new ‘Global SMART Market’ system. This could include a more specific ‘Climate, Health, Energy, Security and Technology’ (CHEST) package of measures.

Countries can be assisted through a separate ‘Financial Investment, Regulatory, Social and Technology’ (FIRST) agenda with emerging markets benefiting from a dedicated ‘Sustainable Assistance Finance and Engagement’ (SAFE) program with climate protection secured through a parallel ‘Sustainable Assistance and Value Enterprise’ (SAVE) agenda. This can be supported by a ‘Global Integrated Law and Technology’ (GILT) or separate ‘Market, Economics, Technology and Legal’ (METAL) framework. All of this would operate through a series of new national and international ‘Protocols’ based on common objectives and principles under a ‘Protocol Adaptive (or Adapted) Safety and Security’ (PASS) regime within a new field of Public International Law. The objective would be to create an integrated form of protocol based ‘Contingent Response for International Safety and Integrated Stability’ (CRISIS) or ‘Contingent Response for International Safety, Efficiency and Stability’ (CRISES) program.

This Bretton Woods III system could form the basis for a ‘Fifth Industrial Revolution’ (FIR) or new ‘Sustainable Technological and Industrial Revolution’ (STIR) and ‘Fifth Adaptive, Sustainable and Technological Economic Revolution’ (FASTER). The purpose would be to create a set of essential global minimum measures or key ‘Global Objectives and Absolute Living Standards’ (GOALS) based on a ‘Core Objectives, Directions, Ethics’ (CODE) statement or primary set of ‘Conduct Objectives Regulations and Ethics’ (CORE). This may also be referred to as creating core ‘Conduct Objectives, Principles and Ethics’ (COPE). This would ensure ‘Fundamental Interests, Rights and Entitlements’ (FIRE), ‘Fundamental Objectives, Rights, Claims, and Entitlements’ (FORCE), ‘Fundamental Objectives, Rights and Global Entitlements’ (FORGE) and ‘Global Rights, Interests and Principles’ (GRIP). This can also be considered in terms of ‘General Laws and Obligations for Behavior And (advanced) Living Standards’ (GLOBALS). This would specifically protect the ‘Controlled Linkage and Integrated Management of Atmospheric Targets and the Environment’ (CLIMATE) and avoid ‘Wasteful Injury, Loss and Damage’ (WILD). This would be based on ‘Carbon Low, Efficient and Atmospherically Neutral’ (CLEAN) systems and apply ‘Biologically sensitive Universal Integrated Law and Development’ (BUILD) techniques to secure ‘Development Reform and Efficient Atmospheric Management’ (DREAM).

The Protocol series would be based on core ‘Enhanced Targeted Higher Integrated Conduct Standards’ (ETHICS) as well as ‘Managed Ordinary (or Official) Responsibility, Application and Liability Standards’ (MORALS) and ‘Special Official Collective (or Community) Individual Advanced Living Standards’ (SOCIALS). This could be considered to secure proper ‘Conduct of Official New Technology enhanced Regulation, Oversight and Law’ (CONTROL). This may include specific ‘Technology and Ethical Conduct Heightened Standards’ (TECHS) or ‘Ethical Conduct Heightened Ordinary (or Official) Standards’ (ECHOS). All of this would in so far as possible be based on the ‘Rule of Law and Ethics or Enforcement’ (ROLE) or ‘Recognized Universal Laws and Ethics’ (RULES). This would support ‘Rights, Ethics and Standards Protection, Enforcement and Control Tools, Techniques or Targets’ (RESPECT).

The system would promote ‘New Earth Worth’ (NEW) and recognize ‘Fundamental Rights, Ethics and Entitlements’ (‘FREE’). It would be based on ‘Fairness, Understanding, Equality and Legality’ (FUEL) and ensure ‘Responsible, Inclusive, Sustainable and Equal’ (RISE) treatment. It would secure ‘Happiness, Opportunity, Peace and Equality’ (HOPE) and promote a more essential ‘Humane Understanding of Mankind and Nature’ (HUMAN). The overall objective would be to create a comprehensive and integrated global crisis management framework for new technological and exogenous shocks as well resolve the principal continuing global challenges and issues that apply at this time. This would incorporate a full set of essential and fundamental rights and protections in a clear, coherent, and accessible manner for the benefit of everyone, including individuals, societies, and nation states. This would be endogenous, exogenous, and essential at the same time as being consistent, complete and coherent to build a new world and new future.

II. New Global Challenges and New Global Solutions

We have created a new world. This is specifically based on technology and social media. The people of the world are now more intimately connected than ever before. This brings massive benefits in terms of ease of social contact, communication, and exchange; although, it also creates inordinate new levels of mutual reliance and essential interdependence. Common causes can quickly result in common damage and common loss. Financial markets are core components within any modern economy and society with market risk and exposures and other internal (endogenous) and external (exogenous) threats having to be built into any larger new systems examination and architecture. This also requires the adoption of a longer, and inter-generational or monumental approach, rather than short-term planning perspective to respond to emergent threats and continuing larger global problems.

Financial markets and financial regulation have been developed to manage specific forms of identifiable risk as well as more peripheral exposures that may impact on market function and market stability. Financial institutions attempt to identify a full range of possible exposures, and to deal with these either directly through risk management systems and controls, including with capital, liquidity, and leverage constraints; or indirectly through the maintenance of appropriate continuity and support management systems. These include new Recovery and Resolution Programs (RRPs) and Special Resolution Regimes (SRRs). Financial regulation has traditionally been either micro, market and sector specific, or macro focused, which assesses the financial system as a whole. Other more subtle forms of exposure can be identified between these with new additional forms of prudential, or sub-prudential, regulation being developed. A number of recommendations can be made to construct new, more effective and efficient types of market regulation and control. These are considered in this paper in terms of more market based, inter-agency and cross-policy based solutions which can be summarized in terms of meso-prudential (or co-prudential), para-prudential, peri-prudential, poly-prudential, or poly-modal regulation.

The most significant challenges can arise in terms of wider external threats outside the financial market system itself. These may be referred to as exo-systemic, or ultra-systemic, rather than endo-systemic threats which require a separate exo-prudential approach. These originate outside the economy and financial system and may have no common connections or relationships, although, disturbance in this exo-systemic sphere may have a fundamental impact on financial markets and society as a whole. These may move beyond creating instability within systems or markets to be existential, fatal, or terminal, and threaten the existence of the market, system, or society itself in a non-recoverable manner. These exo-systemic exposures may include wider forms of extreme biological threats (such as pandemics), uncontrollable natural or planetary events (with earthquakes, tsunami, magnetic disturbances or solar flares), climatic impacts (floods, droughts, typhoons and hurricanes), infrastructure collapse (including cyber-terrorism), other technology risk and failure (with technologically aggravated contagion), and wars and weaponry (including nuclear weapons and nuclear proliferation). These can arise through unforeseen triggers and have impossible trajectories in terms of the economic and social destruction or structural and existential loss created. While many of these reflect natural factors, others are anthropogenic and human in origin with the planet potentially entering a sixth extinction phase. While the global financial crisis, beginning in 2007–2008, can be considered to have been cross-sectoral, but endogenous, the 2020–2021 Coronavirus pandemic was exogenous and beyond human understanding and control, at least, in terms of immediate scope and impact.

The challenge that arises is to develop new control structures that can contain and respond to endogenous and exogenous incidents effectively and efficiently. Financial markets and financial regulation will necessarily form a key part of this in light of the fundamental importance of the functions carried out by financial markets and institutions. These are specifically concerned with the provision of monetary assets for valuation and exchange purposes as well as savings, lending, investment and risk or loss management. Recent advances in technology, especially with the potential emergence of new global supercoins and global internet or software applications (superapps), have required that wider areas of public policy are taken into consideration including specifically monetary, competition, personal data, taxation, and cross-border monetary stability. This requires the construction of new forms of co-prudential or meso-, para-, peri-, and poly-prudential regulation as noted. Larger exogenous threats nevertheless require the construction of even more complete and comprehensive exo-prudential, or ultra-prudential, frameworks beyond current macro-prudential management tools. Failure will not simply result in functional or operational dislocation but will entail wider terminal or existential consequences. New forms of technology (referred to as ‘ExoTech’) may be designed and developed to contain such exogenous threats.

The purpose of this paper is to examine the nature and sensitivity of the physical and new digital economies and ecosystems currently under construction and identify possible sources of threat. The circumstances behind the 2020–2021 Coronavirus pandemic are examined in further detail and market responses reviewed. A new financial regulatory model is constructed that attempts to accommodate wider policy considerations and systems or systemic threats specifically in response to technological innovation. All of this is then built into a larger new outline global response framework that can respond to and contain wider exo-systemic, or ultra-systemic, threats. This includes creating a new form of treaty and non-treaty-based control architecture and international protocol based global conduct and ethical framework to manage continuing threats, challenges, and responsibilities. The paper further assesses the extent to which the opportunity can also be taken to resolve other continuing and residual collective global challenges under a new SMART (or SMARTS) and START (or STARTS) based framework and, in particular, with the construction of a new technology enabled global SMART market regime. A new post-global financial crisis and post-pandemic exogenous control model can be constructed to resolve other essential continuing residual global challenges and responsibilities in this way. A number of provisional comments and conclusions are drawn.

III. Systems and Systems Stability

Financial markets include a number of sub-markets at the national and international levels. Domestic markets include primary and secondary money markets as well as capital or securities, financial derivatives, insurance, and other alternative investment markets (AIM) including hedge funds, private equity, and sovereign wealth funds. National systems also include insurance and gold, or other precious metals which are strictly commodity markets. International financial markets include the Eurodollar syndicated loan and Eurobond markets as well as shorter duration Euro note and commercial paper markets. The international finance system would also include foreign exchange markets and wider trade finance markets.

Financial markets are financial systems. A system can be defined as any organized, or disorganized, structure made up of connected and dependent parts. The system represents the aggregation or conglomeration of its parts. System’s edges can be represented by boundaries or perimeters in regulatory terms.

Systems have been examined in terms of systems theory, control theory, and cybernetics. Writers such as the Austrian biologist, Karl Ludwig von Bertalanffy (1901-1972), studied different types of systems and constructed a general systems theory (GST) in 1946. The objective was to identify several models, principles, and laws applicable to all systems and subclasses of systems. Control theory examines control systems in mathematics and engineering. Control is used to refer to behavior and regulating behavior. Cybernetics is concerned with systems control and communication. Cybernetics considers control and communication in animals, humans, and machines on an interdisciplinary basis, and has highlighted the importance of message transmission between people and machines. Cybernetics was developed with artificial intelligence (AI) in the late 1950s and early 1960s until they separated with AI receiving more substantial funding and research subsequently.

In modern economies and societies, a number of specific issues arise with regard to particular types of systems including complex adaptive systems (CASs), digital systems, digital information and data systems, systems risk, and systems control.

A. Complex Adaptive Systems

Markets and financial markets can be considered to constitute complex adaptive systems. These are complex in that they are made up of multiple components with dynamic connections or intersections and are adaptive in so far as they change in response to internal and external stimuli or events. This would apply inter alia to social systems, communities, cities and urban environments and organizations, governments, societies more generally, and climatic systems. Complex adaptive systems are multi-agent system (MAS) based, with multiple interacting participants, and are adaptive at the component or agent and system level. Such systems are characterized by complexity, adaptation, interaction (including through reciprocity and feedback loops), emergence (uncertain effects), and homeostasis (equilibrium or resilience).

B. Digital Systems

Technology can produce additional complexity through the creation of digital systems. “Digital” is a complex, combination, or composite term with several different meanings. It can also be considered to constitute a contestable concept with the inclusion of a qualitative, value, or judgement element. Modern computing and communication systems, including telecommunications and the internet, are digital based. Digital systems are useful in terms of their speed (low latency), ability to copy (replicate) and multiply (scale) at low relative costs (efficiency), and possibly enhanced security (integrity).

The substantial advances that have occurred in terms of technology and digital systems development which has created new forms of digital or data ecosystems and biosystems, or biomes, over time. While data is technically abiotic, digital systems are dynamic and emergent and can be considered to create their own digital ecospheres or ecosystems. Modern complex digital technology has then created a new digital ecosystem which can be considered to constitute a complex adaptive emergent integrated and resilient system. The effect is to consider digital technology as creating its own digital ecosystems and ecospheres made up of individual digital abiota or biota.

Digital technology produces complex digital systems which interact with other human and physical systems. Digital systems are significant in that they have contain certain unique attributes. These can be summarized in terms of replication, standardization or unification, codification, automation and origination. Many digital registers, including distributed ledger technology (DLT), operate by creating digital representatives, replicas or replicants of non-digital assets or by creating new items through the internal reification of code entries.

Many digital contracts and relations in online environments are constructed by simplifying and standardizing existing terms which will over time create a new form of lex digitalis, or lex digitalis technologica, following the earlier lex mercatoria that created the law merchant during the Italian and European Renaissance. Codification can then be considered under this paper to be concerned with the transfer of oral and written contracts into computer code. Much of this will be programmed to operate on an automatic, continuous and indifferent basis. Simpler mechanical algorithms will be replaced by artificial intelligence (AI) over time which can create new forms of processing and original decision-taking and input. Many aspects of business and government as well as individual and social interaction will be impacted by these advanced changes in technology and automated decision-taking and conduct over time.

C. Digital Information and Data Systems

Almost all systems operate through the transfer of information or data although the meaning of these terms is unclear, particularly in law. Information can be understood to refer to any single point or statement of fact, opinion, or law. Fact and law can be distinguished to the extent that legal systems operate on the basis of legal rights, which are determined in accordance with the relevant legislative or judicial framework that applies, with facts being concerned with real or physical items or events. Data can be separately defined to refer to information collected or processed within specific limits, guidelines, parameters, constraints, or conditions. Data is then structured or controlled information. Knowledge can be considered to constitute processed information or data subject to understanding, appreciation, or awareness. Ideas are mental representations of information, data or knowledge. Records or ideas are stored, accumulated, or assembled; information or data are held and protected over time.

The Information Society can be understood to refer to parts of society based on information and communication technologies (ICT) which involves the production, dissemination, and examination of information for cultural, economic, and political purposes. Information technology is concerned with the generation, retrieval, transmission, management, and storage of digital information and data on computer systems with communications technology examining the transfer of information by oral, mechanical, or electromagnetic devices including wire, radio, and optical telephony. The Information Economy is concerned with the use of information systems for manufacturing and distribution or service provision purposes. Information ecology examines information use and exchange within relevant ecosystems. A Digital Society can be understood to refer to a system, or part of a system, that uses digital devices or technology for information, data and knowledge creation, storage exchange, transfer, and cancellation or destruction and associated decision-taking, communication, management, and governance processes.

A Knowledge Society refers to one in which information is used to promote understanding and secure specific objectives including enhancing the human condition more generally. Knowledge can also be understood in terms of human capital or cognitive capital. The United Nations Educational, Scientific and Cultural Organization (UNESCO), which was originally established in November 1946, has attempted to promote the development of Knowledge Societies beyond Information Societies after an international event in Paris on February 25–27, 2013. This followed an earlier World Summit on the Information Society (WSIS) in Geneva, Switzerland in December 2003, and Tunis, Tunisia in November 2005. UNESCO highlights human development beyond information exchange and technological innovation with four core principles of freedom of expression and freedom of information, universal access to information and knowledge, quality education for all, and respect for linguistic and cultural diversity.

While information and data cannot generally be considered to constitute property under law, various protections are provided in terms of private data privacy, public information disclosure and intellectual property rights protection. One of the specific difficult issues that arises is if a disproportionate degree of legal protection is provided, this can suffocate research and innovation and the more general expression or exchange of ideas and communication. It is necessary to ensure an effective flow of information, data, knowledge, and ideas for academic, business development, general social interaction, and exchange purposes. Excessive legal protections may otherwise create a form of information or technological dependence, servitude, or slavery. The need to maintain a degree of common or open access to information and data can be understood in terms of creating a form of social ‘information commons’ or global ‘knowledge commons’. Commons were areas of land used for collective grazing in medieval times. Specific forms of digital commons have been created such as through the use of open information access devices including wikis as well as open source software and licensing to allow public access and community contributions, such as through the use of Creative Commons (CC) licenses. It is essential to ensure that digital rights are fairly and proportionately protected without any ‘tragedy of digital commons’ and consequent destruction of more general innovation, exchange and communication.

D. Systems Risk

All systems must be protected against all relevant risks and threats. This includes all applicable internal (endogenous) and external (exogenous) exposures. Financial markets specifically are subject to a number of financial, operational, legal, conduct, and wider environmental threats. Traditional forms of micro regulation have been constructed to manage these risks, including through requiring firms to comply with appropriate capital, liquidity, and leverage requirements, as well as adhere to specific personal and systems and controls conditions. Following the global financial crisis beginning in 2007-2008, authorities have also constructed more inclusive wider macro-prudential oversight mechanisms to monitor risk on a cross-sector rather than intra-sector specific basis.

The particular risks that arise in each area have to be identified and managed. A number of more general classes of exposure arise outside more traditional regulatory examination and analysis. These could be summarized in terms of network theory, or network risk, as well as complexity, chaos, catastrophe, and crisis or collapse theory and risk. Network theory is concerned with relationships and connections between elements within a system. Human, organization, and country relations are examined in terms of social network analysis. The principal significance of networks is that they create transmission channels through which loss and exposures can be easily and quickly transferred. Complexity theory forms part of systems theory and examines interactions between parts of a system including adaption, emergence, and self-organization. Chaos theory examines deterministic patterns within random events including social systems. Catastrophe theory studies sudden or significant changes in systems caused by limited, selective, or small events. Crisis theory specifically discusses the failure of capitalist economies although it can also be understood more generally to refer to any examination of instability within financial markets or systems. Cycle theory examines recurrent cycles within markets or social systems. All of these assist explain changes in markets and the impact of extreme events. Extreme events can also be explained in terms of outliers and ‘black swan’ theory. The most significant or extreme exposures can threaten the stability of a system and cause systems or systemic failure which prevents normal function.

Continuing digital and market innovation has created new challenges in terms of risk control and regulatory design. One important recent development has been the possible launch of new global digital coins (supercoins), such as Facebook’s proposed Libra (and then Diem) coin or super applications (superapps), such as Alibaba’s AliPay or TenCent’s WeChat mobile payment platforms. The potential use of supercoins specifically raises a number of challenges across a wider range of public policy arena that have to be considered on a national and cross-border basis for the first time. These include monetary policy, competition policy, data exchange policy, taxation policy, and cross-border payment and capital movement policy in addition to regulatory, infrastructure and consumer protection policy. New forms of regulation have to be developed. These can include market or digital technology based co-regulation or meso-regulation, inter-domestic and cross-border agency cooperative para-regulation and larger integrated cross-policy, multi-policy, poly-prudential, or poly-modal regulation. A further level of existential or fatal systems risk may also be added where the system collapses and cannot be recovered. New forms of prudential regulation can then be considered.

A new regulatory regime can be constructed to respond to the challenges created by new technology as well as wider exogenous threats. An extended financial model can be developed to deal with technological innovation that can then be extended to manage wider external or exogenous threats from outside the financial system or society. These may arise as a result of natural events, climatic effects, political, and military disruptions including warfare, biological viruses, or other unforeseen events. New types of exo-prudential, or ultra-prudential, regulations have to be considered to contain these threats in addition to internal exogenous shocks.

E. Systems Control

The effect of all of this is to create a complex mix of interconnected physical, biological, digital, and connected legal systems all of which may be subject to numerous separate or interconnected endogenous and exogenous exposures. A complex system’s architecture can then be constructed to manage all forms of potential internal and external instabilities. Any new solution would have to preserve the existence, continuity and operation of the system itself as well as protecting underlying legal, economic, and social rights and interests. This specifically includes legal entitlements under national and international law, including fundamental human rights, as well as other expressions of social rights or entitlements in ethics or other agreed standards of individual or social conduct. System stability would then refer both to the stable operation of systems as well as continuity of relevant rights and protections on which societies are based.

A handful of specific difficulties may arise in the event of a major crisis unfolding. National preference or protectionist measures can act as significant obstacles to collective action and the loss of core rights. This can create a consequent culture of nationalism, or reactive populism, which is essentially isolationist and confrontational. Uncoordinated action can lead to conflicting policy situations and results, including competitive bidding for necessary scarce supplies, such as, medical equipment, medicines, and vaccines. “Blind” or “cold” capitalism can ignore significant social needs within society. Many markets and sectors are considered in isolation and as separate systems, rather than as interconnected parts of a larger whole. Many policy solutions are then isolated, reactive, and uncoordinated. The overall effect is to focus on the individual or particular, rather than the collective, total result and response.

Despite the difficulties involved, it should be possible to construct a single composite global response and articulation, aggregation or codification of core objectives, rights and entitlements within an extended framework to maintain, protect, and apply over time both regarding more immediate threats and longer-term pressures and challenges.

IV. Exogenous Instability and Coronavirus 2019

The most significant recent external shock or event was the novel Coronavirus 2 (SARS-CoV-2 or 2019-nCoV) crisis in late 2019, 2020 and 2021. The virus produces a severe acute respiratory syndrome (SARS). The World Health Organization (WHO) designated the virus as a severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) with the disease creating Covid-19. The WHO declared the novel coronavirus outbreak a public health emergency of international concern (PHEIC) on January 30, 2020, and classified Covid-19 a pandemic on March 11, 2020, after its emergence in China at the end of 2019 and notification to the WHO on January 3, 2020.

Coronaviruses are a group of pathogens that cause respiratory tract infections in mammals and birds. Coronaviruses are zoonotic and can be transferred between animals and humans and humans to humans. Coronaviruses in humans originated in the late 1960s with other diseases following. SARS-CoV-2 is closely related to bat and pangolin coronaviruses and SARS in 2003. Symptoms include fever, dry cough, and fatigue. Death may occur between six and forty-one days from infection but most commonly occur within as short as fourteen days. The virus replicates in infected cells. Viral mutations can occur when humans and animals come together in live, or wet, markets where wild animals are sold with other food produce. Scientists have attempted to understand the virus genome and the twenty-seven proteins it produces to develop vaccines.

Infections were initially uncovered in Wuhan, the capital of the Hubei province in China at the end of November 2019. The first person who contracted the disease, “Patient Zero (0)”, possibly a fifty-five year-old gentleman from the Hubei province, was infected on November 17, 2019. Two-thirds of the early infections were connected with the Huanan Seafood Wholesale Market. The first death that was officially recorded was in Wuhan on January 9, 2020, with the virus spreading rapidly across China, and with 81,285 cases and 3,287 officially recorded mortalities by March 26, 2020. Over 8,000 people had earlier contracted SARS between 2002 and 2003 with 9.5 percent dying. While Coronavirus produced a much smaller mortality rate, it was much more virulent and spread faster.

The genetic sequence for coronavirus was released by Chinese authorities on January 12, 2020, with infections dating back to November and December 2019. The WHO and other researchers considered that the virus may have mutated from animals to humans in October 2019. Earlier coronaviruses passed through civet cats with SARS in 2003 and through camels with MERS in 2020. Covid-19 was considered to have possibly originated with Rhinolophus (horseshoe) bats with another intermediate animal such as a pangolin.

The novel coronavirus was later reported to have initially mutated into, at least, thirty different genetic variations and subsequently mutating into separate UK, Brazil, South Africa, and New York variants in late 2020 and early 2021. Nineteen mutations had previously been undiscovered. More aggressive strains could generate 270 times more vigorously than weaker strains. The diversity of the mutations would have to be considered in developing any vaccine or response treatment. A more severe second wave arose over summer and autumn 2020 in many parts of the world with a third wave emerging with dangerous new variants in early 2021 coinciding with winter flu seasons.

Authorities attempted to flatten the transmission curve of the virus to reduce the reproductive rate (R), which represents the number of new infections arising from a single person or infection. Flattening the curve extends the period during which the virus spreads but reduces the peak level, removing pressure on national health systems. Allowing the virus to spread can, nevertheless, facilitate the development of collective or “herd immunity” across societies, but this may also lead to new variant mutation.

Countries attempted to limit the spread through the adoption of a large number of protective measures including: physical (hand washing); respiratory hygiene (with masks); social distancing; self-isolation; shielding policies; viral testing (“test, track, and trace”); imaging; and later vaccine programs, such as, those that began in the UK in December 2020. Absent a vaccine, patients may require assisted breathing using a ventilator, although significant difficulties arose in many countries with machine availability, personal protection equipment (PPE) supply, and staff needing to safely work with infected patients.

A. China

The first officially reported infection in China was on December 1, 2019. Cases initially doubled every seven and a half days. The outbreak was disclosed in a public notice on December 31, 2019, by the Wuhan Municipal Health Commission with the WHO informed the same day. A formal quarantine program was announced by the Chinese government on January 23, 2020, around Wuhan and then fifteen other cities quarantined in Hubei, which impacted 57 million people. The main Chinese New Year celebrations were cancelled on January 25, 2020. Other measures were adopted January 26, 2020, including the imposition of travel restrictions,; closure of schools, universities and museums,; and remote working requirements. Initial internal transmission had ended by March 24, 2020,, with a fourteen day quarantine requirements imposed on people entering China to prevent new transmission and secondary spreading. In April 2020, China had to impose further lockdowns in Harbin, the capital of the Heilongjiang Province bordering Russia. Three cities were quarantined again in May 2020 to prevent further transmission with further lockdowns in January 2021 including in Shijiazhuang in Hebei province and Tonghua in Jilin province.

Twenty-one people had caught the virus in Hong Kong by 8 February 2020 with seven having travelled from the mainland. The first case in South Korea was confirmed on January 20, 2020, and a quarantine and screening program was implemented on February 23, 2020.

B. Europe

On January 30, 2020, infections were confirmed in Italy, and flights to and from China were cancelled the next day. Infected cities imposed quarantines on February 22, 2020; further closures were announced on March 4, 9, and 11,2020. A cluster of sixteen cases were detected on February 21, 2020, near Codogno, a town in Lombardy, which became one of the most seriously affected areas. Large gatherings of people were prohibited in Italy on March 8, 2020, an restaurants, bars, and non-essential shops were closed on March 12, 2020. The first case in Spain was identified on January 31, 2020.

The virus entered France on January 24, 2020, and Germany on January 27, 2020. French President Emmanuel Macron appealed to his nation’s “sense of national solidarity” in an address on March 12, 2020. On March 17, 2020,France imposed a strict lockdown; people were required to sign an attestation from the Interior Ministry to leave their homes. A second wave erupted across Europe in summer 2020, and the WHO warned that a third wave would follow in 2021 unless countries built up the necessary protective infrastructure.

Scandinavian countries and Sweden, in particular, responded slower with less social distancing measures though this was expected to tighten over time. Sweden experimented with developing herd immunity and without imposing a formal lock down although this inevitably led to a higher relative mortality rate.


The first UK infections were discovered on January 29, 2020; the two Chinese tourists had to be treated in York. The government advised against non-essential travel and social contact on March 16, 2020, and further closures and social distancing measures were introduced on March 18 and 23,2020. Non-essential businesses except for supermarkets, pharmacies, hardware shops, petrol stations, garages, and banks were closed,, gatherings prohibited, and travel and outdoor activity restricted. Concerns arose as to whether the UK National Health Service (NHS) would be able to manage the scale of the crisis. By mid-April, the UK had 88,821 covid-positive people and 11,329 covid-related fatalities. Fatalities rose to over 50,000 by the beginning of November 2020 and to over 100,000 by the end of January 2021. While other governments focused on testing and isolating, the United Kingdom’s initial policy was to protect the vulnerable and the health service and leave the rest of society to rely on herd immunity. More direct and necessary measures were adopted throughout 2020, including a second lockdown beginning in November 2020. These stringent requirements were a necessary response to the emergence of new viral variants. The original government response, “Stay Home,” was replaced with “Stay Alert” in May 2020 and then “Stay at Home” by January 2021.

D. United States

The virus entered the United States on January 20, 2020, in Washington State through a gentleman returning from Wuhan on January 15, 2020. A White House Coronavirus Task Force was set up on January 27, and a public health emergency was declared on January 31, 2020. The United States was criticized for not taking sufficient early action to prepare for the spread of the virus. The government considered that the epidemic had abated by the middle of March. The Coronavirus Preparedness and Response Supplemental Appropriations Act, which allocated more than eight billion dollars in emergency funding, was ratified on March 6, 2020, travel restrictions were imposed on March 11 and 14,2020, and a national emergency was declared on March 13, 2020. Unemployment claims increased to a record 3.3 million by the end of March 2020. Industrial production fell 5.4% in March 2020—the worst figure since 1946—and retail sales fell substantially. Further measures were proposed by the Biden Administration following the change of government on January 20, 2021, including a $1.9 trillion dollar stimulus bill.

E. International

Further concerns arose about the virus spreading globally by the end of January 2020. Widespread transmission was predicted from the middle of February 2020. The virus spread to Hong Kong, South Korea, and Iran, and later to Thailand, Malaysia, Vietnam, the Philippines, Laos, and Myanmar.

Japan acted slower with a later declaration of emergency and only a voluntary and partial lockdown. Japan announced ¥430 billion ($4 billion) in spending with around ¥1.6 trillion in emergency lending without interest or collateral. There was less collective action than may have been expected. The Diamond Princess cruise ship was marooned off Yokohama in February 2020 after 218 of 3700 passengers became infected.

The virus had limited initial impact in India although concerns remained regarding the ability of its medical system to manage a major outbreak with a population of over one billion people. Equivalent concerns arose regarding Africa. Specific issues arose regarding the lack of necessary medical facilities to support patients especially on ventilators.

Planet Earth was described as being in the process of “shutting down” by the second half of March 2020 with possible future closures required. While mitigation policies suppressed the spread of the virus initially, this would recur subsequently through mutations and without effective vaccines or wider herd immunity. While the crisis attacked communities and societies equally indiscriminately, its impact and costs were unequally rather than equally born. The Peterson Institute for International Economics in Washington bluntly stated that international cooperation was necessary or more people would die.

V. Market and Regulatory Management

The Coronovirus crisis had a major impact on financial markets across the world. The Organisation for Economic Co-operation and Development (OECD) predicted that global growth in 2020 would be the lowest since 2009. The International Monetary Fund (IMF) estimated that annual global economic growth would fall by three percent with a partial recovery in 2021 and global output would reduce by $9 trillion. The IMF predicted that total global net public debt would increase from 69.4% to 85.3% of national income in 2020. Public deficits would rise from 6.2% to 9.9%. U.S. public sector debt would increase from 5.8% in 2019 to 15.4% in 2020, and net public debt would grow from 84% to 107% of national income. Global responses led to a collapse in stock market values by around a third with many businesses being forced to close under lockdown. The S&P 500 fell eight percent at the beginning of March. North Sea oil prices were damaged by the combination of the Coronavirus and the collapse in oil prices aggravated by a price war between Russia and Saudi Arabia. A study commissioned by the International Chamber of Commerce (ICC) Research Foundation later estimated that the global economy would lose up to US$9.2 trillion if governments did not ensure that developing economies received proper access to COVID-19 vaccines.

The crisis resulted in significant asset price falls, a switch of funds into safe assets (including U.S. Treasury Bills gold and other precious metals), the purchase of risk protection (including use of exchange and off-exchange financial derivatives), and the temporary suspension of other investment programmes with capital retention and liquidity calls within financial and other corporate entities. Regulatory authorities relaxed capital, liquid, and leverage conditions; allowed macro prudential concessions; suspended stress testing; and published other clarifications such as regarding senior managers and treating customers fairly in the U.K. Core financial value is generally nevertheless never lost as such even with a major crisis but often simply reallocated until recovery takes place and then reassessed with assets revalued.

Several measures have been adopted to attempt to contain and respond to the virus. Initial global legislative and central bank support exceeded $2.5 trillion by March 2020, including a U.S. $2 trillion support and stimulus package and central bank liquidity in 2020 and further U.S. $1.9 trillion in 2021. Around $8 trillion in state loans and support were provided to private firms in America and Europe which represented two years’ worth of profit. Total fiscal stimulus was initially estimated to be around two percent of GDP by end of March 2020. One difficulty that arose was that central banks had maintained low interest since the global financial crisis which limited their ability to reduce further. Government response packages had to support companies and households with mechanisms that were fast, efficient, and flexible. Concerns nevertheless arose. Businesses required immediate funding which could be most efficiently provided through the banking system, with banks providing cheap or zero cost lending to clients and with governments guaranteeing and covering losses. Bonus systems were introduced for early repayments.

Governments had to balance carefully lock-in, or lock-down, and lock-out, and lock release, measures and medical care provision as against economic recovery regarding local conditions and spread and reinfection risk. Difficult medical decisions would continue to arise with medical staff having to reconcile conflicting interests and individual moral dilemmas. Coronavirus challenges nevertheless confirmed the ability of public services to innovate and scale rapidly where necessary such as with the construction of new hospital or medical facilities in the U.K. and the rapid development and deployment of the U.K. vaccine program.

A. Federal Reserve Board and U.S, Congress

The Federal Reserve confirmed on March 23, 2020, that it would purchase corporate debt including bond Exchange Traded Funds (ETFs) to stabilize the market. The Federal Reserve relaxed dollar swap line conditions with central banks in Japan, Britain, Switzerland, Canada and the Eurozone, with the Bank of Japan providing $30 billion and the ECB $112 billion in U.S. dollar denominated debt. Swap lines were not extended to emerging markets. The Federal Reserve cut interest rates by 1.5 percent.

The United States Congress allocated $8.3 billion of support funding at an early stage. Congress initially rejected a proposed stimulus package, although this was agreed on March 25, 2020. The United States launched the largest fiscal stimulus in modern history with a $2 trillion package or one tenth of GDP in early 2020, and then a further $1.9 trillion in early 2021. The package consisted of a number of measures concerning income support, business bailouts, unemployment insurance, hospital funding and small business assistance. $500 billion would be provided to support businesses through government loans and guarantees with $25 billion dollars specifically made available to passenger airlines, $4 billion to cargo airlines, and $17 billion to businesses “critical to maintaining national security.” A form of direct payment to households was considered with $1,200 per adult, $2,400 per couple and payments for children with entitlement being phased out above $75,000 per person or $150,000 per couple. Direct monetary transfers had been rejected by the Trump Administration earlier.

Unemployment benefits would be increased by $600 per week for four months in addition to state payment which averaged $385 per week, and with availability being extended to self-employed and temporary “gig economy” workers. $367 billion would be provided in loans and grants to smaller businesses with less than 500 employees with firms being able to claim up to 250 percent of monthly payroll figures through approved lenders. $150 billion would be committed to medical provision through hospitals and care facilities, staff and training, protective equipment and medicine testing. The United States Congress agreed a separate $484 billion stimulus package on April, 21 2020. This included $320 billion in additional funding for the small business Paycheck Protection Program (PPP) as part of the largest stimulus package.

Former Federal Reserve Chairman Powell stated that further measures would be taken as necessary. Chairman Powell confirmed that the Federal Reserve would use its powers “forcefully, proactively and aggressively” until the United States economy recovered from the Coronavirus shock and that its “‘emergency tools’ would [only] be ‘put away’ once recovery” was in place and “private markets and institutions [could] . . . ‘perform their vital functions of channelling (sic) credit and supporting economic growth.’” The Federal Reserve announced that it would provide a further $2.3 trillion support package on April, 9 2020 through the purchase or backstop of securities including “‘fallen angel’ junk bonds, junk bond ETFs, municipal debt and an array of asset-backed securities.” The U.S. Federal Reserve effectively became a “Buyer of Last Resort” (BLR) as well as “Buyer of First Resort” (BFR) for US capital market debt. A “Main Street lending facility” would be provided “for companies with revenues under $2.5 billion and 10,000 employees.” The effect of this was to support shadowing banking activity in the United States. The announcement surprised markets through the extension of credits to support higher risk debt and businesses. Some commentators argued that banks should suspend dividends and raise capital to cover post-crisis shocks and recovery costs. In the first quarter of 2020, Bank of America, Citigroup and Goldman Sachs set aside $12.8 billion of charges to cover loan losses, with JPMorgan Chase and Wells Fargo allocating $12.3 billion in credit charges.

B. U.K. Bank of England

It was estimated that the U.K. economy would suffer a 35 percent drop in output in the second quarter of 2020 with government borrowing increasing “by £218 billion to £273 billion in 2020-21.” The budget deficit would be 14 percent of GDP which was the highest since World War II and above the 10 percent deficit experienced following the global financial crisis. Tax revenues were predicted to be £130 billion, or 15 percent lower than expected, with government spending being £88 billion higher and amounting to 52 percent of GDP which was the largest since 1945. The Bank of England supported the Office of Budget Responsibility (OBR) assessment that there would be a 35 percent drop in output in the U.K. for 2020. That U.K. would suffer the largest fault in economic output in 300 years. It was estimated that the pandemic would create a more significant recession than following the 2008-2009 financial crisis.

The Bank of England initially reduced base rates by fifty basis points to 0.25 percent, established a new facility to allow banks to draw “liquidity to sustain lending for small- and medium-sized businesses,” and reduced capital requirements. Chancellor of the Exchequer, Rishi Sunak, announced an initial package of measures as part of the Budget on March 11, 2020. Thirty-billion pounds, or 1.3 percent of GDP, would be injected into the economy, including £12 billion of coronavirus-related funding. Mr. Sunak, in providing an open commitment to support the needs of the National Health Service, announced a £5 billion emergency-response fund. Statutory sick pay was met by the government for firms with less than 250 employees, and the time to pay scheme was extended to allow firms to restructure tax payments. Business rates were reduced to zero for the year following the announcement for small businesses, and 700,000 smaller firms received a £3,000 payment to manage small business rates.

The U.K. provided £330 billion (15 percent of GDP) to firms in cheap lending. Benefit claimant numbers in the U.K. rose by 477,000 within nine days at the beginning of the crisis. “185,000 businesses applied for £1.5 billion of state aid” under the pay furlough scheme on its launch day, April 20, 2020. Councils were granted £1.6 billon in support, with £1.6 billion already having been committed to cover increased spending. The funding was made proportionally available to Wales, Scotland, and Northern Ireland.

The Bank of England subsequently reduced interest rates to 0.1 percent and implemented a £200 billion U.K. government and corporate bond purchase program following a special Monetary Policy Committee meeting in March 2020. Total bond purchases were increased to £645 billion. The new Term Funding Scheme for Small and Medium-sized Enterprises (TFSME) was funded through the issuance of central bank reserves. The Bank’s policy committees published a package of measures to support UK businesses and households on the same day the budget was announced on March 11, 2020. The Treasury created a separate Covid Corporate Financing Facility (CCFF) on March 17, 2020, in which the Bank acted as the Treasury’s agent in the purchase of commercial paper from companies to support salary, rental, and supply of payments.

The Treasury announced on April 9, 2020, that use of the Ways and Means Facility (W&M Facility) would be extended to allow the government to finance coronavirus spending through its overdraft facility with the Bank of England. The W&M Facility is usually held at around £400 million, although this was extended to £19.9 billion in 2008 following the global financial crisis. With the exception of the 2008-2009 crisis, the W&M Facility has not generally been used for substantial government cash management since the establishment of the Debt Management Office (DMO), with drawings under the facility being paid before the end of the tax year. It was confirmed that unlimited financing would be made available to cover coronavirus costs. The Bank of England previously indicated that increased funding would not be covered through monetary financing, such as expansion of the W&M Facility. The decision to end monetary financing would remain with the Treasury.

Governor Andrew Bailey had referred to the use of monetary financing as a “historical feature,” but within four days. This operates through the provision of direct funding to the government, which repays the balance through later borrowing in the financial markets. Twenty billion pounds was made available through monetary financing following the 2008 global financial crisis. The government also expected to increase borrowing through gilts from a monthly high of £28 billion in September 2009, to £45 billion in April 2020. Government bond yields were initially reported to have experienced little change in April 2020. Gilts were issued at a negative rate in May 2020 while the Bank of England considered adopting a negative interest rate policy which had earlier been rejected.

C. European Central Bank (ECB)

The ECB adopted a €750 billion Pandemic Emergency Purchase Program (PEPP) in March 2020. The ECB confirmed on 25, 2020 that it would purchase €750 billion of additional bonds without the previous restrictions that applied to earlier asset purchase programs. In June 2020, the ECB approved purchase of an additional €600 billion government and corporate bonds, totaling €1.35 trillion purchased in 2020 and accounting for approximately 10% of Europe’s GDP. The ECB then stated it would consider another increase of up to €1.6 trillion.

Concerns were expressed that this may create legal risks and political criticism. But the ECB did still provide “quasi-fiscal” support to more vulnerable member states, such as Italy. Sovereign support was also necessary for such countries as Italy and Spain and other peripheral economies. Italy had to approve a €25 billion emergency budget.

Eurozone finance ministers initially could not agree on the provision of credit lines under the European Stability Mechanism (ESM) in March 2020. Nine Eurozone member countries called for the establishment of a joint European bond funding program for policies to counter the economic impact of the pandemic. Germany and the Netherlands had traditionally rejected the production of “Eurobonds” as a form of “mutualised debt issuance.” Member states may be able to borrow under the European Stability Mechanism (ESM) at low rates. Though the use of Eurobonds, or restyled “Coronabonds” was resisted, some form of time restricted recovery fund supported by member state guarantees or the EU budget should be considered. This would demonstrate solidarity in the exceptional circumstances of the pandemic.

ECB, President, Christine Lagarde, confirmed that the ECB could not lend directly to governments as that would be contrary to EU law, and providing payments to citizens directly would be difficult. The ECB could not purchase debt directly from Eurozone governments and rejected giving “helicopter money” directly to households. “Primary market purchase of government debt . . . would undermine” disciplined budgetary policy management. The ECB could still purchase bonds in the secondary market, which included buying up to one third of the debt of Portugal and Germany. Direct household funding had not been considered by the ECB because it would create operational, accounting and legal issues. There had also been no comprehensive cost benefit analysis conducted on its economic and monetary impact.

It has been argued that the ECB had to act to avoid a ruinous break-up of the EU as it was the only institution with sufficient capacity to do so. This was necessary as the crisis created an enormous economic shock with asymmetric results across member states. The ECB would “act ‘flexibly across time, asset classes and jurisdictions.’” The ECB launched a €750 billion Pandemic Emergency Purchase Programme on 18 March 2020 to “restor[e] the orderly functioning of euro area financial markets” and “ensure that [an] accommodative monetary policy [was] transmitted to all parts of the single currency area.”

French President, Emmanuel Macron, warned that the EU could collapse as a “political project” unless it assisted and supported the recovery of Member States facing difficulty, such as Italy. Despite German and Dutch opposition, Macron noted that the EU had “‘‘no choice’’ but to set up a fund that ‘could issue common debt with a common guarantee’” to provide assistance in terms of need rather than the size of economies. The EU was at a “moment of truth” unless it demonstrated sufficient solidary to prevent a rise in populism. France proposed establishing an emergency investment fund of €400 billion in addition to other ECB support. Macron stated that it was time to “embark on the unthinkable” with the crisis transforming capitalism but with leaders having to act with humility. Former ECB President, Mario Draghi, stated that higher public debt levels were inevitable with private debt cancellation. The EU would agree, in July 2020, to a €1.074 trillion budget and €750 billion support package for the next seven years.

D. China and Asia

Chinese authorities previously lowered interest rates but banks in China remained profitable. The Chinese “economy shrank for the first time in four decades” with GDP falling 6.8 percent in the first quarter of 2020 before recovering. E-commerce companies in China like Alibaba and JD, confirmed that they would provide booking services to conduct individual COVID-19 tests. Chinese companies attempted to use official “force majeure certificates” to avoid contractual performances without penalties although western companies rejected this.

Asian responses were more limited. Singapore approved a S$48.6 billion ($34 billion) support package. Hong Kong set up a HK$30 billion ($3.9 billion) fund to provide funds to eateries, travel agencies, retailers and other affected industries with individuals receiving HK$10,000 each. Australia published three stimulus packages in two weeks’ worth A$189 billion ($113.8 billion) or ten percent of GDP with interest rates being lowered to 0.25 percent.

E. International

While equally severe lockdowns were imposed in many emerging economies, government support could not match that provided in developed markets. Eighty countries were compelled to approach the IMF for support by the beginning of April. The UN Conference on Trade and Development (UNCTAD) recommended the imposition of capital controls with IMF approval to limit outflows. Central banks had to provide additional support while ensuring not to reward speculation or increase risk taking. The IMF warned in October 2019 of vulnerabilities in terms of rising corporate debt burdens, increased holdings of riskier and more illiquid assets by institutional investors and an increased reliance on external borrowing by emerging and former market economies.

The IMF made $50 billion available to combat the virus with World Bank providing $12 billion at the beginning of March. The IMF cancelled $214 million in debt repayments by twenty five of the world’s poorest countries in April 2020. The G20 considered suspending $18 billion in debt payments through a moratorium on bilateral government loan repayments to avoid an emerging market debt crisis within a post-crisis action plan. Sovereign debt repayments would be frozen for six or nine months following an appeal by the IMF and World Bank in March 2020. A number of proposals were made for sovereign debt relief in advance of the IMF and World Bank meetings in Autumn 2020.

F. Economic Suspensions Programmes And Lockdowns

A number of policies and responses had to be developed during the crisis to contain and manage infections and to support businesses and households. This led to the development of new terminology for both medical and social use. In order to design and develop effective wider extreme event responses, it is necessary to consider revisions across all government and public areas of activity. This includes revising and enhancing monetary policy (interest rate management and government borrowing); fiscal policy (taxation and spending); economic policy (industrial programmes); trade policy (the importation and export of goods and services); social welfare policies; and regulatory, infrastructure, data protection, and competition policies.

The immediate need following an extreme biological concern is to provide unlimited support to public health and welfare services programmes. This is part of a necessary initial primary response across the world and in all countries. Countries attempted to contain the spread through a series of measures including physical (washing) and respiratory (mask) hygiene, social distancing, self-isolation and various shielding policies in addition to viral testing (test, track and trace), which are supported by generous financial aid.

A number of other mechanisms were considered depending upon local circumstances and conditions. These mechanisms included:

(1) Central bank liquidity provision and lending, particularly, through loan and bond purchase programmes although some countries, such as the UK, had to adopt forms of direct monetary financing through the reuse of the existing “Ways & Means” facilities, which operates as a form of government overdraft arrangement with the Bank of England;

(2) Business support, including loans and guarantee facilities for larger and smaller companies;

(3) Taxation and business rates deferral;

(4) Employment support, including salary “furlough” with payment of up to 80 percent of employee wages;

(5) Targeted industrial support, particularly, to charities, airlines, the hospitality sector, and possibly schools and universities; and

(6) Business insulation measures, including bankruptcy protection through the provision of extended administration programmes and statutory insolvency law adjustments, as well as any other financial or regulatory concessions and clarifications.

A set of further measures must also be considered at the cross-border or international level:

(7) Coordination of all relevant United Nations policy programmes and institutional activities by the World Health Organisation (WHO) in particular and other relevant international agencies and governmental and non-governmental organisations (NGOS);

(8) Extended IMF support and assistance for countries;

(9) Enhanced World Bank and Regional Development Bank (RDB) investment programmes;

(10) EU Member States support through the ESM and possibly the direct issuance of “Eurobonds” longer term if existing national or objections can be removed or qualified;

(11) Reactivation of international trade negotiations through the WTO Doha Trade Round, including the introduction of further tariff concessions in all priority areas such as medicines, personal protection equipment (PPE), medical equipment (including ventilators), vaccines and all other hospital supplies; and

(12) Enhanced and strengthened crisis management and continuity planning for the long term.

The objective is to ensure that all necessary actions can be taken in any extreme event. This would include temporarily suspending normal market operations and planning for the reinstatement of markets as soon as possible to allow for long term economic recovery, development, and advancement.

VII. Economic Recovery Suspensions Programmes and Lockouts

All countries have had to prepare separate exit strategies with different options or iterations, depending on how the local crisis enfolded. Some countries considered relaxing lock-in restrictions in stages beginning April 2020, although there appeared to be a lack of certainty and consistency, resulting in some exit strategies having to be reversed with new waves of infections. Almost all countries suffered because their initial lockup and lockdown strategies were inadequate. Some commentators warned that the economic disaster could transcend “the human one” if lockdown conditions were extended. The WHO introduced six criteria in April 2002 to be considered before any lockdowns were to be released and encouraged that measures be continued under a “new norm” until vaccines were available. The WHO later called for vaccine sharing between wealthier and poorer countries and the avoidance of export restrictions while the EU was strongly criticised for threatening to impose vaccine export restrictions. The UK was able to announce a four-condition formal lockout or release programme on February 22, 2021 following the success of its immunisation and vaccine programme, which would apply between March 8 and June 21, 2021.

Appropriate measures could be set out in new “Crisis Management” or “Post-Crisis Recovery” Protocols, which would develop a range of protective provisions for communities as well as corrective or stimulative measures for the economy. This would generally include a “Recovery Strategy and Timetable,” “Infection Management Strategy,” “Education and Community Strategy,” “Transport and Public Utilities Strategy,” “Business Sector Strategy” and “Government Services” strategy. All of these strategies would work together to allow people and businesses to have the confidence to return to work under controlled and progressive conditions. A series of programmes could be adopted under each of these strategies to allow for a staged or phased opening process addressing health, transport, workplaces, education, childcare and continuing welfare support. The specific purpose would be to provide clear guidance as to how lockdown conditions could be reduced or removed over time. All of these measures would be subject to continued monitoring to ensure that no new infectious clusters or third or fourth waves arose, particularly, by taking all necessary corrective action against new variant or mutation infections immediately and by tracking, tracing, and isolating new cases.

A continuing “Infection Management Strategy” would also have to be put in place to prevent viral recurrences or secondary spreading including through asymptomatic contact. This could, for example, be based on a six part programme of policy conditions consisting of care (monitoring), cause (origin research), containment (limiting spread), correction (treatment) control (prevention through immunisation and vaccination), and a community support (education initiative). This could be extended further as required. This would necessarily have to include ongoing vaccination development and distribution, community education and engagement strategies that attempt to identify possible viral strains and respond to new mutations. Conditional research and production strategies should also be in place to mitigate any new or unforeseen viral threats, especially where no immediate vaccine is available.

VIII. Market And Regulatory Model

In an extreme crisis, there are generally a number of different possible sources of exposure or points of failure within markets and economies. These may arise at the micro, macro, , or systemic levels. Difficulties may arise in terms of managing the relationship between markets, regulated institutions, and authorities, as well as between regulatory agencies and countries. It is also necessary to coordinate wider public policy responses to the threats created by larger cross-market impacts, like the emergence of new supercoins, such as Facebook’s Libra (later Diem) coin, or superapps, such as WeChat or AliPay. A number of new exposures may emerge that require a series of new regulatory approaches which may be summarised, for the purposes of this paper, in terms of co-financial or meso-financial (meso-prudential), para-financial (para-prudential), peri-financial (peri-prudential or techno-prudential), poly-financial (poly-prudential) and exogenous (exo-prudential) approaches. Each of these is considered further below.

Moreover, it is possible to design a new outline or proto-global regulatory control framework that would initially be directed at managing financial and then wider utility shocks as well as other areas of new technology applications. This could then be extended again to manage other forms of endogenous and exogenous threats and events to create a complete control programme. The following more specific comments may be made on financial and technological specific risks with wider exogenous exposures.

A. FinTech, RegTech, BigTech, DataTech and NewTech and FutureTech

Markets have undergone significant change in recent years, especially with the prevalence of technology across all financial sectors and in relation to all financial functions and activities. This change was accompanied by substantial growth in FinTech and RegTech, BigTech, DataTech, NewTech and FutureTech. FinTech uses technology to improve the structure and operation of financial markets and the delivery of financial products and services. RegTech uses technology for regulation and compliance purposes. BigTech involves the emergence of powerful and large technology companies that are increasingly moving into the financial and FinTech areas. DataTech involves the increased production, use, and distribution of personal data for business and regulatory purposes.

NewTech is concerned with current technology developments, and FutureTech with new evolving fields and applications of all kinds of technology. NewTech and FutureTech specifically deal with infrastructure or InfraTech, such as shared computing, super and quantum computing, telecommunications, blockchain and graph technology, and revision and reform of the Internet and World Wide Web, as well as applied technology or AppliedTech,, such as automation and small contracts, biotechnology and cryptography, nanotechnology, robotics and cyborgs (or cybernetics), machine reading and machine learning, and artificial intelligence (AI). All of these will have a major impact on the structure and operation of markets and their relevant risks. Technological advances can nevertheless also be used to manage any aggravated or new exposures and to assist in the balance between the relative advantages and disadvantages of such technology in markets and broader market function.

B. Micro, Meso, Para, Peri, Macro, Poly and Exo-prudential Regulation

Financial regulatory approaches have generally only considered markets in terms of specific sectors, on a micro-basis, or on a macro basis. This has resulted in the development of enhanced new micro and macro-prudential regulatory techniques, particularly, following the global financial crisis. A number of further gradations or extensions can be considered considering more recent changes. Meso-prudential, or co-regulation brings regulators, markets and regulated institutions closer together on a more integrated and embedded basis. Para-prudential regulation involves creating closer relationships between different sets of regulators among different countries. Peri-prudential, or techno-prudential, regulation is a part of RegTech and involves the increased use of technology for market operation, regulation, and compliance.

Poly-prudential, or polymodal, regulation involves considering exposures from across a wider range of public policy perspectives, including data protection, competition, and infrastructure, as well as monetary policy, financial integrity, capital and payments policy, and taxation policy. This has become of particular importance with the development of supercoins and superapps that could have a massive impact on global market scope, scale, and stability. Each of these must be re-considered again against the backdrop of possible exogenous or extra-systemic threats that may require a further level of exo-prudential regulation and ExoTech. This may again be reviewed as part of the establishment of a new global regulatory framework, which may be referred to as “proto-prudential regulation.”

C. Regulatory Policy and RegTech

The scope and content of financial regulation had to be reconsidered following the global financial crisis. This specifically led to a tightening of capital adequacy standards with the Basel Committee on Banking Supervision’s Basel II framework being reconstituted as a Basel III regime, and more recently, the Basel IV finalisation package. Base IV imposed stronger Tier 1 capital conditions with two new short and long term liquidity ratios and a non-risk adjusted leverage cap for the first time. Additional measures were adopted inter alia to strengthen governance, college supervision, cross-border resolution, and wider macro-prudential oversight. All of this has to be reconsidered again following the emergence of wider exogenous exposures. The immediate need was to conduct a perimeter review to ensure that all activities that could impact financial market stability were subject to proper authorisation and supervision.

Regulation can be assisted by technology through a new field of regulatory technology (RegTech) which uses technology for control or compliance purposes. This has been referred to as being the new FinTech. This can also be applied to official practice by authorities (or ControlTech) and firm compliance issues (CompTech). A number of benefits, disadvantages, and limitations of RegTech can be identified. This became of more importance as risk management and financial regulation became increasingly data driven and with technology being used to collect, process, assess, apply, and store data. RegTech became an increasingly important part of larger financial technology (FinTech) and attracted increasingly substantial annual investment The use of technology could bring substantial additional efficiencies to financial regulation as well. Regulation must become more morphic or ductile and embedded with a series of new regulatory principles to make RegTech more adaptive and reflexive, collaborative and coordinated, iterative and modular, resilient and self-sustainable, as well as emergent and inclusive.

D. Supervisory Policy and SuperTech

More complete supervisory arrangements can be established to cover all areas of policy within and between countries. Technology may already allow for substantially improved supervision to be conducted in practice. This could allow for more complete, detailed, and timely regulatory reporting to be carried out with firms increasingly moving towards real-time data, report tendering, and submission. Machine reading and machine compliance would allow firms to submit necessary returns on an automated basis and comply with any regulatory changes automatically. Authorities could separately develop new software to allow them to understand better the returns made which may include, for example, “anomaly software” that allows them to detect malware, viruses, and other variations or interference that require further attention. All of this may be referred to as creating a new form of supervisory technology (SupTech), including new forms of “machine supervision.”

One of the important reforms adopted after the global financial crisis aimed to extend the use of “college supervision” and ensure that all large international banking and other financial groups had an appropriate supervisory committee made up of all of the relevant national component authorities involved. Supervisory colleges could be extended to ensure that they cover all areas of financial activity and operate as “conglomerate or complex group colleges.” A separate “Technology College,” or “sub-college” could also be established to deal with more technological and sensitive issues on a cross-sector and cross-border basis. A separate “Policy College” could also be created either on top of supervisory colleges or as distinct sittings of the same college with additional members representing wider policy interests. This could, for example, include information or data representatives, attendees from competition authorities or infrastructure departments within central banks, or supervisory authorities as part of new poly-prudential or poly-modal framework.

E. Data Policy and DataTech

As financial markets and society become increasingly digital and data-based, data regulation and data supervision could form an increasingly important part of any new, more complete, regulatory response. This is of particular relevance in relation to exogenous risk and the uncertainties created alongside it. New and extended forms of Big Data analysis could be developed to monitor economies and attempt to identify, track, or model potential exposures, although technology itself is not the solution.

Data protection would form an important part of any new co-regulation, co-supervision regime. A number of important obligations are imposed on EU firms and non-EU firms processing the personal data of EU citizens under the General Data Protection Regulation (GDPR) and specific national legislation like the UK Data Protection Act 2018. These include a general “compliance by design” principle and series of other more specific principles and rights and obligations imposed. Appropriate “data toolkits” could be created by authorities and firms working together to ensure compliance with all relevant requirements. It is essential that all necessary personal information and data interests are protected. Relevant representatives, for example, from the UK Information Commission, could be represented on the extended Policy Committee or College .

Other private market initiatives could also be considered and incorporated within these processes. These may include, Sir Tim Berners-Lee “SOLID” (Social Linked Data) and “PODS” (Personal Online Data Stores) proposals developed through the inrupt company. This followed a paper by Berners-Lee on “Socially Aware Cloud Storage” in 2009. The objective would be to hold personal data in PODS that could then be licensed to other parties for use, allowing maximum control, full realization, and participation commercial benefit. Other initiatives include, for example, Data Trusts proposed by Professor Dame Wendy Hall and Jérôme Pesenti in the UK.

F. Competition Policy and ComTech

An important new control element would be ensuring that all relevant financial markets operate effectively and are not damaged by anti-competitive, abusive monopolistic or oligopolistic, or other distortive behaviour. Competition considerations have generally been considered separately from financial market regulation, although elements of the considerations are increasingly being incorporated into financial laws. The principal issue with new supercoins or superapps is the possible abuse of a concentrated or dominant market position. Acquiring a monopoly, or operating within an oligopoly, is not illegal unless the position is separately abused. This may include preventing competition, acquiring competitors in the market to limit competition, imposing high prices, or potentially abusing data rights.

The behaviour of all relevant parties needs to be monitored to ensure there was no abuse of a dominant position or other illegal collusion under relevant national laws or EU law. Authorities may also consider whether specific definitions of relevant markets, power or dominant position, and abusive practices need revision to cover new global financial and commercial operations including BigTech and social media platforms. Discussions and decisions could also be coordinated under the proposed Policy Committee or College arrangements referred to. This is another area that would need careful monitoring because relative market positions may change over time.

G. Infrastructure

The impact of any new activities on domestic infrastructure systems needs monitoring so all necessary services and functions are carried out in an effective manner on a continuing basis. Infrastructure includes payment and settlement systems, securities and derivatives clearing, and settlement structures with any separate custodial or other functions. Infrastructure oversight may be managed by the central bank or possibly by a specific department in a separate supervisory authority. Infrastructure is generally not regulated as a separate activity, although specific functions may be like payment, securities exchanges, and clearing houses.

H. Resolution Policy and ResTech

A number of important initiatives were adopted following the global financial crisis to ensure that banks and other major financial institutions were subject to effective resolution and market restructuring or market exit procedures. Significant difficulties arose regarding a number of institutions being “too big to fail” (TBTF) and non-resolvable. The Financial Services Authority (FSA) in the UK adopted a number of early initiatives with a joint procedure later entered into between the FSA and US Federal Deposit Insurance Corporation (FDIC). The issue was considered by the Basel Committee and FSB, and a number of papers will be published on this. The EU adopted a separate Banking Recovery and Resolution Directive (BRRD) in 2014.

These measures generally provide for the establishment of Recovery and Resolution Programmes (RRPs) or pre-crisis “living wills”, or possibly “funeral plans”, allowing firms to restructure or prepare for resolution in the event of a crisis. This includes pre-crisis internal Recovery plans or programmes whereas firm would adopt a series of measures to restore its stability and prevent closure. A separate Resolution Plan or programme would come into effect when the firm could not be rescued, which would allow for external authorities to assume control, wind-up, and liquidate the firm including through official Special Resolution Regime (SRR) provisions.

One of the effects of the substantial growth in FinTech is that technological aspects of resolution must be taken into consideration. This is particularly import when operational risk, like technology, information, and data risk become more important as innovation, advancement, and construction of data based markets increase. Authorities could consider establishing separate “Technology Committees” or “Technology Colleges”, or sub-committees or sub-colleges, to manage such more specialized and dedicated matters. Parallel or integrated ”Technology Recovery Programmes” (TRPs),and RRPs could be developed to manage technological aspects of a rescue programme. Crisis Management Group (CMG) membership and function could also be extended to include technology and possibly other exogenous related exposures and risks.

I. Crisis Policy and CrisisTech

A further significant issue that aggravated the global financial crisis in 2008 and 2009, was the absence of effective extended market support arrangements. While traditional lender of last resort (LLR) facilities were available, they only applied to banks and on strict conditions. These required the institution be solvent, although illiquid, unless its closure created contagion and a systemic threat; in which case, support may be provided although only on penal terms to limit reliance and moral hazard. These have traditionally not been applied to securities or other non-bank financial institutions. A number of ad hoc facilities had to be developed in the post-global financial crisis period to provide support in specific sectors and, in particular, in the US. The global crisis was partly averted by the announcement of the UK three-point rescue plan on the morning of Wednesday, October 8, 2018, which was to provide around £35 billion of additional capital for the major UK banks with guarantees to allow them to roll over their wholesale lending and with additional market liquidity under the Bank of England’s Sterling Lending Scheme (SLS).

It is possible to re-state and synthesize these in terms of five possible general facilities that should be made available in the event of a possible future crisis. These consist of: (1) specific institutional Funding of Last Resort (FLR), (2) general Market Liquidity Lending of Last Resort (MLR), (3) Capital of Last Resort (CLR), (4) Guarantees of Last Resort (GLR), and (5) either Asset Purchase or Insurance of Last Resort (ALR or ILR). While the provision of market support is undesirable and should be restricted or conditioned to limit moral hazard, it must be accepted that all governments may need to respond to an extreme crisis event and provide necessary contingent support. A pre-set, organized, and publicly disclosed set of arrangements should be in place to provide necessary support within banks and to other non-bank systemically important financial institutions (SIFIs), global SIFIs (GSIFIs) other systemically important markets (SIMIs) as necessary.

J. Macro-Prudential and Poly-Prudential Policy

A number of new macro prudential initiatives were adopted following the global financial crisis. Difficulties arose as new products and services, like the structured finance market, developed in the gaps between existing financial market regulatory oversight regimes. Attention, accordingly, switched to attempting to identify wider risks across the financial system as a whole. A number of new agencies, with specific mandates, were set up for this purpose. These included the Financial Policy Committee (FPC) within the Bank of England in the UK, the European Systemic Risk Board (ESRB) in the EU, and Financial Stability Oversight Council (FSOC) in the United States. It may be argued that overall financial stability fell within the traditional mandate of a central bank although the reforms adopted clarified responsibility and provided a clear set of necessary statutory powers to contain such risks. Financial macro-prudential supervision should be further extended because a number of other significant policy areas may be impacted by new innovative products or wider risks. All of these issues could have to be considered within the combined new poly-prudential, para-prudential, or poly-modal procedure recommended.

K. Exo-Prudential Regulation and Protocol Policy

Existing micro- and macro-prudential data collection and oversight regimes can be extended to attempt to identify potentially wider exogenous shocks. This may, arguably, already fall within the existing mandates of many macro-prudential agents in the form of unspecified wider market threats. These terms could be further reviewed to consider any possible future exogenous threats. The overall objective would be to ensure that financial markets could withstand any form of major disruption and assist wider social containment and recovery efforts.

A new series of protocols could be adopted to clarify responses. Specific protocols can be adopted in the regulatory area to confirm the application of wider policies to new technological innovations like supercoins and superapps. This would include regulatory, supervisory, data protection, competition, infrastructure, resolution, market support, and macro-prudential initiatives. The protocols could then be extended to include wider policy areas such as monetary policy, monetary stability, and market integrity. Further, the protocols could be extended to include specific crisis protocols such as in relation to pandemics, natural disasters, climate impacts, terrorism and war, and other forms of social or systems collapse.

L. Proto-Global Prudential and Global Regulation

All of these initiatives may be drawn together to create a new form of outline global, proto-global, or proto-prudential control model. The residual challenge is to ensure all relevant regulations are applied on a consistent and effective basis nationally and internationally. Reference has already been made to the need to conduct relevant perimeter reviews establishing extended supervisory arrangements with pre-crisis Policy Committees or Colleges and post-crisis Policy Management Committees. Other wider areas of concern can be considered as part of the new poly-prudential, para-prudential, or poly-modal oversight mechanisms proposed. While these measures may be sufficient, consideration should be given to establishing clearer national or regional regulatory and policy zones that specify which regulatory provisions apply to new global products and that operators must comply with.

A number of countries established valuable technology support facilities including through the use of regulatory sandboxes on a UK Project Innovate Model. Originally, Project Innovate was created by the FCA in October 2014, to support technological innovation in the financial area and clarify and assist with the application of relevant regulatory standards for new platforms and operators. Project Innovate consists of a Regulatory Sandbox, Direct Support facility, Advice Unit, RegTech element, and engagement programme. The FCA recommended in February 2018 the creation of a global sandbox which led to the establishment of the Global Financial Innovation Network (GFIN). A number of benefits were identified with the GFiN and the work programme. The GFIN was set up with thirty-five, and now sixty, regulatory authorities and seven observers with three core work streams were pursued, with the GFiN acting as a collaborative group for authorities and providing a forum for joint work and regulatory trials and supporting firms through the provision of cross-border solutions. It was specifically agreed that the GFiN would focus on growth (G) be flexibility and adaptability (F), innovation andd inclusiveness, (I) and create a network (N) to support innovation in financial markets and inter-agency learning.

The GFiN is an important initiative primarily focused on collaboration, testing, and information exchange. With the emergence of significant new global financial products, like Libra (now Diem) coin, the GFiN regime could be strengthened to assume a more direct regulatory role. This might be referred to as creating a “Global Financial Regulatory Network” (GFrN) or “Global Regulatory and Enforcement Network” (GReN). These networks could include coordinating the design and application of national regulatory provisions with licensing, conditions, and enforcement either being managed on a cooperative basis, either through the GFrN or GReN, or extended supervisory or Policy Committees or Colleges referred to. Regulatory sandboxes could separately be converted into full “control boxes” in respect of specific products or platforms that raise regulatory concerns and ”policy boxes” to the wider public policy areas.

The effect of establishing a new global extended regulatory control network of authorities with clearly articulated regulatory and policy zones and regulatory and policy control boxes could form the basis of a new form of proto-global financial regulation. All of this work could be coordinated through the FSB, as the principal link financial agency at the international level, which specifically brings national central bank, treasury, and regulatory authorities together with all of the principal international standards-setting bodies and other important representative groups including the IMF and World Bank. The FSB already maintains a virtual global rulebook with its Compendium of Standards with around 300 standardsand 15 core standards. This work could be incorporated into that of the new Global Financial Regulatory Network, with the GFrN or GReN, and FSB also considering the possible creation of a separate set of key FinTech and RegTech standards or including this within the existing FSB standards. A specific product or institution set of standards could then be created for Libra (Diem), or other stablecoins, as part of a larger global “regulatory toolkit: to be administered by the GFrN.

The effect o would create a meaningful and relevant wider regulatory enforcement framework within which any new exposures could be managed and controlled. This could then be revised and extended to apply to other new global products, services, or institutions as they became relevant. All of this could be set up relatively easily and at low cost as it builds on existing international standards and processes. This would create a new form of proto-global financial control and regulation to manage financial and wider market crisis and shocks. This core framework could then be extended to create a supporting institutional structure for responding to more general exogenous shocks at the international level as well as other continuing global challenges.

XI. Global Market, Technology, and Residual Control Model

An appropriate total framework must be constructed to contain endogenous and exogenous threats to the financial systems, economies, and societies at the national and international levels. This is necessarily difficult because it is impossible to predict or foresee all possible sources of threat. Appropriate containment systems and arrangements must nevertheless be in place to prevent full existential or terminal collapse. The 2020 Coronavirus pandemic demonstrated the sensitive global condition and its vulnerability to unforeseen attack, at least in terms of the spread and impact, if not, specific source or cause. It must be accepted that similar threats may arise in the future with continuing challenges—particularly in relation to natural disasters, climatic and atmospheric impacts, cyber collapse, technology failure, or military destruction—all of which could result in social or systems collapse. It is also essential to consider and manage the impact of this on the most vulnerable people within each society and community and in the most impacted countries.

The opportunity can then be taken to extend the framework to incorporate and respond to other global challenges at this time. These challenges include protecting fundamental human rights, ensuring free trade between nations, climate protection, effective market regulation and global governance, technology ethics, and collective peace and security. A range of sustainable, manageable, adaptive, regulatory, and targeted (Smart) tools can be adopted for this purpose within a new composite “Social, Market, Atmospheric (Climatic), Regulatory, Technology, and Security” (SMARTS) framework. The SMARTS framework would operate with a parallel “Social, Trade, Atmospheric, Regulatory, Technology, and Safety” (STARTS) agenda. Security and safety can either be included in either agenda or dealt with separately. This would specifically include a technology-based new ‘Global SMART Market’ model operating on open but reciprocal market conditions. This could be set up under GIFT or a separate “Global Reciprocal Economic Area Treaty” (GREAT), which could form the basis of a new Global SMART Market system.

A further targeted support programme can be constructed based on “Finance, Investment, Regulation, Social, and Technology” (FIRST) principles. Emerging markets can be supported through a “Sustainable Assistance, Finance, and Engagement” (SAFE) initiative with climate support being managed through a parallel “Sustainable Assistance and Value Enterprise” (SAVE) framework. All of this is manageable through a ”Global Integrated Law and Technology” (GILT) programme or series of “Market, Economy, Technology, and Legal” (METAL) measures. These programmes or measures would be based on the “Rule of Law” (ROLE) or “Rule of Law and Ethics or enforcement” (ROLE) policy. Key measures would be established and implemented through a series of Protocols under a “Protocol Adaptive Safety and Security” (PASS) framework.

All of this would operate under a larger new Global Investment, Finance, and Trade (GIFT) treaty framework. This can be summarized in terms of creating a new Smart SMART STARTS GREAT FIRST SAFE and SAVE reform program with a supporting GILT, METAL, and ROLE agenda operating within a wider GIFT and PASS framework. This could be given effect by adopting a form of conditional or contingent “global neo-functionalism” or “market functionalism,” following the earlier neo-functional policy adopted within Europe as the basis for post-WWII integration. This would be conditional or contingent to the extent that countries wishing to trade with other countries would have to agree to adhere to the other core parts of the global SMARTS (and STARTS) agenda, with the implied sanction being loss of access and trading privileges if the condition is not met.

Existing international protections within the SMARTS and STARTS agenda would be restated and clarified with new measures added. None of the existing protections would be diluted or removed in any way, but rather collected together in a new consolidated restatement. The objective would be to draw together all of the key rights, protections, privileges, and objectives that exist to ensure consistency, coherence, and avoidance of conflict and overlap, and to make these available in an easy-to-access and understandable format. This would specifically rest on a series of core conditions, principles, and objectives common to all of these protections, with more specific entitlements being set out in individual protocols. This would create a larger, single SMARTS and STARTS agenda encompassing all necessary areas of protection. This larger agenda would include an open “Global SMART Market” mechanism, which would be constructed with the goal of having all countries agree to adhere to minimum common or collective global standards or conditions to maintain continuing access. All of this would be given effect within the larger GIFT Treaty and PASS Protocol framework supported by a series of more detailed policy and crisis management protocols.

The following specific comments and observations may be made to this proposal.

A. Threat and Social Impact

The personal and social damage created by exogenous threats cannot be quantified. Fatalistic causes and consequences can lead to the loss of life in societies and communities across the world. The scale of loss created through personal bereavement or suffering is limitless in terms of emotional and individual impact. People and communities must persevere, and societies must rebuild. Societies and social systems will always strive to survive, as one of the key responsibilities of government is to assist and promote these essential processes.

Former Governor of the Bank of England Mark Carney has warned that transferring the market economy into the market society could be reversed by the coronavirus crisis, with values having to be placed before valuations. While more government intervention and further public control (BigGovernment) was necessary to combat the crisis, care has to be taken to ensure that more draconian controls that may have been introduced are later removed so that balance may be restored. A specific concern, for example, arises over the increase in surveillance to manage crisis in conjunction with the corresponding need to protect private data interests long-term. Governments may resist withdrawing from market intervention and direct social control, at least in the short-term. Governments were compelled to inject massive amounts of funds into private markets to support economies as part of a new form of “Crisisomics” or “Coronaomics.” Governments have to avoid austerity and depression conditions, with a new era of constructive and balanced sovereign debt management being created as part of responsible Coronaomics. Protectionism and “Isolationomics” may assist some countries in the short-term, although this may lead to increased social as well as economic challenges and dislocation longer-term.

Others have noted that liberal democracies may have to decide between “authoritarian nationalism” and an open global order based on state cooperation following the pandemic. While the crisis was not created by globalization or capitalism, it confirmed limitations within unrestricted private markets. Other “orthodoxies” have also had to be rejected, including strict-balanced budgets, public deficits, and debt GDP ratios, with sustainable spending and borrowing limits being reset in place of an earlier hands off approach. Open liberal markets will only survive based on political consent, with any new populism being resisted. The need for states to cooperate may re-create the conditions for a new, open progressive global order.

Technology has allowed countries to withstand and manage the pandemic and other biological threats more effectively than at any previous time in history. As data collection and analysis has increased, proper and responsible data control and management must still follow. Social suffering and impact have also still been unfairly distributed, with societies continuing to be heavily dependent on lower-paid services such as nursing and health care, teaching, delivery drivers, and transport, as well as electricity, water, and other utility provisions. The coronavirus confirmed that mankind can withstand natural onslaught if proper, informed, and balanced political leadership coordinates resource management and to take the difficult and necessary policy decisions where this cannot responsibly be left to machines.

Crisis can necessarily lead to the adoption of government intervention to manage demands, at least in the early stages. The key for all countries long-term is to reconcile or balance an active market economy with larger state involvement, particularly where there have been demonstrable elements of market inefficiency or market failure. Some commentators have noted that the balance between an active market economy and larger state involvement may represent the demise of traditional capitalism because states will have to support economies in extreme crisis events. Many politicians appointed following the global financial crisis have been forced to support more populist causes that reject globalisation and favour scientific or expert direction—although this may only be temporary. These conflicting positions must be reconciled by adopting appropriate and responsible policy balance.

B. Containment and Continuity

Governments and regulatory authorities must be aware of all possible endogenous and exogenous threats. Any one of these threats can have significant systemic, existential, or terminal consequences. New regulatory controls must manage endogenous risk as well as operate within larger safety parameters to protect markets and systems from wider, extra-systemic threats and exposures. The focus must be on loss absorption and resilience to ensure continuity and preservation of function rather than outright threat prevention which may be impossible. This focus on loss absorption and resilience can be dealt with through a combination of new para-prudential, meso-prudential, para-prudential, poly-prudential, and exo-prudential or ultra-prudential responses.

Crises can be explained in terms of causes and consequences. After any initial period of market restoration and consolation, systems must focus on containment and continuity. Specific responses depend on the nature of the particular endogenous or exogenous threat. In 2020, various steps were taken to test and identify the source of coronavirus to limit its spread within and across countries. Increasingly severe social distancing, remote working, quarantining, shielding, and lockdown measures were imposed in different countries, including transport restrictions between countries. These measures occurred while continuing efforts produced and tested viable vaccines. Several increasingly substantial measures were adopted on a staged basis to protect the stability of financial markets to ensure that markets and economies could continue to operate and to support wider social recovery. The scale of the threat inevitably meant that these measures were substantially more significant than those taken following the global financial crisis beginning in 2007-2008.

Specific markets, individual financial institutions, and companies were forced to trigger ad hoc preservation plans to allow themselves to keep operating while on a remote or core-staff-only basis. A specific challenge created by coronavirus was enforcing social separation requirements which compelled systems and societies to operate at a distance. While this challenge would have been one of the factors considered in designing continuity operations, the severe biological and physical nature of the pandemic’s threat stretched across many employment and medical systems. This will have to be reconsidered in terms of any post-coronavirus crisis reviews.

The scope and scale of the crisis also meant that many areas of policy response were triggered. The triggered areas included regulatory, monetary, economic, industrial and manufacturing, healthcare, educational, transport, police and public order policies. The scale of social impact and damage meant that all of these policies had to be considered and managed together, often using military-based procedures, military practices, and military personnel. These policies will have to be reviewed again subsequently to ensure that adequate containment, coordination, and control arrangements are always in place to allow these policies to combat future challenges or threats. A series of new common crisis management protocols must be developed in the ruins of the coronavirus crisis to allow appropriate contingent solutions to be available in the event of future shocks or disruptions.

C. New SMARTS and STARTS Global Control Model

Rather than simply respond to the immediate crisis, an opportunity can also be taken to construct a larger correction framework and agenda to attempt to resolve other continuing global challenges and threats. The new measures would be incorporated into a Smart framework. Smart is a complex, combination, or contestable concept, as noted. Smart can be understood in management terms. Other possible meanings of Smart include connectivity, automation, pre-programming, decision taking, and policy or purpose. The term can be re-used for this paper either to refer more generally to sustainable, managed, adaptive, responsive, and targeted (smart) measures, or possibly using Socially Managed, Adaptive, Regulatory, and Targeted (Smart) tools. It may also be used to construct a larger, more inclusive minimum protection and continuing reform agenda based on SMART or SMARTS agenda or parallel START or STARTS framework. The objective would be to identify a set of core standards relating to social, market, trade, climate, regulatory, technology, and security issues in each case. These core standards would include a Global SMART Market (GSM), as noted, based on a ‘single market agreed reciprocal, tied or targeted treatment’ model (Smart) and an ‘Open Trade and Tariff Elimination Regime’ (OTTER). This market would be operated under the GIFT or separate GREAT, as noted. This treaty would, in turn, promote open free trade and reflect a ‘Free International Tariff, Trade and Equivalents Regime’ (FITTER) .

Other papers have been issued in each of these areas at the international and domestic levels and by various government, public, regulatory, inter-governmental organisations (IGOs), non-governmental organisations (NGOs), and private bodies. Yet these papers create a complex and confusing mix of specialist standards rarely understood by anyone other than the dedicated practitioners in each field, and then usually only in isolation. It is consequently difficult to form any overview of each of these sets of measures or to understand how they might be considered to fit together and operate within an overall package. It is correspondingly difficult to ensure that they can all be implemented effectively in practice. A new smart, SMARTS, and STARTS agenda can thus be constructed for this purpose which restates or summarises the key rights, protections, and objectives involved.

This agenda would include several new response measures and CRISIS or CRISES agenda. These response measures would rest on a six-part programme of policy Care (Monitoring), Cause (Identification or Research), Containment (Exclusion and Spread limitation), Correction (Treatment), Control (Prevention through Immunisation and Vaccination), and Community (Education). This programme could include a more specific CHEST protocol. A separate FIRST system could be designed to target attention and funding with a separate SAFE programme for emerging and developing economies. There could also be a SAVE agenda to support climate care. These systems would specifically protect CLIMATE considerations and avoid WILD concerns. This protection could follow CLEAN systems and apply BUILD techniques to secure a DREAM system..

As it would be difficult to agree on all the detailed measures in a formal treaty adopted under Public International Law, the system would adopt a PROTOCOL model. This model would effectively operate on a ‘Protocol Adaptive Safety and Security’ (PASS) basis. This PASS basis could depend on a STOP (‘Standards Tailored Oversight and observance Protocol or Protection’) and DIGITAL (‘Design In Global Integrated Technology And Law’) response strategy. All of these systems would fit within a larger ‘Global Investment, Finance, and Trade’ (GIFT) treaty system within which the specific Protocols would be managed and administered. This treaty system would use the latest technology for measurement, monitoring, and management purposes. This technology could be implemented under a GILT or METAL operational framework. This implementation would reflect the rule of law with a set of core principles possibly set out within a supporting ROLE agenda based on underlying RULES.

The overall objective of the system would be to promote ETHICS or FIRE. This system would include SOCIALS and MORALS. This system could involve the use of the ‘Controlled Application of National Conduct and Ethical Laws’ (CANCEL). Protections would be expressed in the forms of GRIPs. Consideration could be given to preparing another ‘Fundamental Integrated Global Human rights Treaty’ (FIGHT) with a supporting ‘Fund for Investment in Global Human, Technology, and Economic Rights’ (FIGHTER).

There would be identified FORGE with FORCE. There could also be more specific controls on ‘Weapons Arrested (or assisted) Response or Responses’ (WAR or WARs) and controls on ‘Lethal Autonomous Weapons’ (LAWs). Separate protocols could be designed to ensure ‘Safe Equipment Conduct Under a Regulated Environment’ (SECURE).

These initiatives could be given effect to through a series of technical protocols in each area. A core set of regulatory, policy, crisis management, SMARTS, and institutional protocols could be developed. These protocols would then be drawn together into a new global framework system under the GIFT Treaty model proposed. The protocols may either consist of standards or separate technical processes and procedural protocols. Standards protocols would set out core protections with technical protocols establishing relevant implementing standards including computer coding and automated operations, if possible. These core protections can be applied on a sustainable, managed, adaptive, responsive, and targeted (smart) basis. The overall objective would be to promote HOPE and a more HUMAN system.

D. Social Control

Minimum social standards can either be considered in terms of individual human rights, or more collectively, having regard to the United Nations Sustainable Development Goals (SDGs), or other social, political, and economic rights. A core set of minimum human rights was set out in the Universal Declaration of Human Rights (UDHR) adopted by the United Nations General Assembly on December 10, 1948. The objective was to recognise “the inherent dignity and equal and inalienable rights of all members of the human family as the foundation for freedom, justice and peace in the world.” The articles prescribe thirty core rights and protections. The European Convention on Human Rights (ECHR), which contained sixteen core entitlements, was adopted by the Council of Europe on a proposal by Winston Churchill in 1950 and came into effect in 1953. The ECHR was implemented in the U.K. under the Human Rights Act of 1998.

The UDHR is said to create an International Bill of Human Rights with the International Covenant on Civil and Political Rights (ICCPR), with two optional protocols, and the International Covenant on Economic, Social and Cultural Rights (ICESCR) both adopted in 1966. The ICCPR consists of fifty-three articles and came into effect on March 23, 1976, with the ICESCR comprising thirty-one articles and coming into effect on January 3, 1976. The General Assembly originally intended to produce the UDHR with one convention and implementation measures. The decision was taken to propose the UDHR for adoption during the third session of the Commission on Human Rights and with the convention being divided into two covenants in 1952 for separate finalization and approval which became the ICCPR and ICESCR.

A number of these core values were separately incorporated into the 2030 Agenda for Sustainable Development and United Nations SDGs. The objective was to set out an action plan for people, the planet, prosperity, and to strengthen universal peace. This agenda followed a number of other important initiatives including the establishment of the Millennium Development Goals (MDGs) agreed at the Millennium Summit in September 2000 and Monterrey Consensus on Financing for Development agreed in March 2002, along with other important developments. The SDGs can be considered to consist of eight principles relating to the individual and eight measures applying to society, with the addition of a seventeenth implementation objective.

Other attempts have been made to establish new development laws or models. The UN General Assembly adopted two important resolutions on May 1, 1974: the Declaration on the Establishment of a New International Economic Order (NIEO Declaration) and the Programme of Action on the Establishment of a New International Economic Order. These resolutions were later restated and developed in a further resolution on December 12, 1974, in a Chapter of Economic Rights and Duties of States (CERDS). Despite strong support for these measures by developing countries, a core group of leading developed states resisted their formal recognition and implementation.

While more strict measures are often required during a crisis, authorities must also ensure that essential and fundamental rights of citizens are not unnecessarily or disproportionately removed or undermined. Ultimately, this is a question of balance. Powers must be exercised for legitimate purposes although not in a manner that unnecessarily curtails other rights and privileges. Authorities must also take proportionate action in relation to crises more generally. The 2020–2021 coronavirus was particularly infectious and spread rapidly especially in urban populations of poorer regions and countries. Many people were either asymptomatic or only displayed mild symptoms, with the most vulnerable being the elderly or people suffering from pre-existing medical conditions. Governments must consider the short-term damage to legitimate businesses, and the long-term, inter-generational cost transferred to future taxpayers.

A condensed version of twelve core individual and twelve social principles could be incorporated into a new consolidated set of SMARTS standards. The individual core standards would consist of rights to (1) life, (2) liberty, (3) legal identity and protection, (4) privacy, (5) avoid physical and economic slavery, (6) non-discrimination, (7) freedom of thought, conscience and religion, (8) freedom of expression, (9) marry and have a family life, (10) peaceful assembly, (11) vote and participate in democratic inclusion, and (12) nationality and passport. The parallel or supporting social rights would consist of (1) protection from hunger and proper provision of food and water, (2) shelter clothing, (3) heat and energy, (4) prevention poverty and provision of minimum standard of living, (5) medicines and health provision, (6) equality, (7) education, (8) employment and training, (9) hold private property, (10) freedom of movement, (11) welfare and care provision, and (12) guaranteed legal rights and protection. All private and public organizations would be expected to adhere to these standards, particularly with respect to working conditions, infrastructure, sustainable communities, and effective, accountable, and inclusive institutions.

E. Market and Trade Control

The SMARTS agenda can be considered to include a core market regime and the STARTS agenda can be considered to incorporate a supporting trade regime. These can either be used separately or as part of a single set of core values and objectives. The market regime would reflect more general social or economic entitlements, associated best market principles, and standards relating to the sale of goods and supply of services. The trade regime would incorporate core principles and policies recognized under International Trade Law.

Market or trade standards are intended to promote cross-border exchange in accordance with an agreed set of objectives. This creates a minimum safeguards framework while simultaneously promoting trade liberalization through the removal of monetary tariffs, quantitative quotas, and other measures of an equivalent effect (MEEs). Free trade was promoted by the Spanish theologian, Francisco de Vitoria (1483-1546) on the basis of the international law of nations (ius gentium) as well as Scottish economist Adam Smith (1723-1790) and English economist David Ricardo (1772-1823). The establishment of an International Trade Organization (ITO) was proposed at the Bretton Woods Summit in New Hampshire in July 1944; less than four years later, the Havana Charter was produced in March 1948 after it was proposed by the British Economist, John Maynard Keynes. Following the failure by the United States to ratify the Havana Charter, countries entered into the General Agreement on Tariffs and Trade (GATT) with eight rounds being agreed upon between 1947 and 1994. The World Trade Organization (WTO) was eventually established on January 1, 1995, resulting in “the biggest reform of international trade since the end of the Second World War.”

In April 1994, the Final Act concluded the GATT Uruguay Round and the Ministerial Marrakesh Agreement, thereby establishing the WTO. The GATT has since been utilized to govern goods, with a number of other agreements, annexes, decisions, and undertakings being entered into and provide for trade, services, and intellectual property rights. The Doha Development Round (DDR) was commenced in Doha, Qatar, in November 2001—with meetings being held between 2001 and 2015 and concluding in Nairobi, Kenya in December 2015—and covered twenty areas of trade. Specific points of negotiation included agriculture, export subsidies, export credits, special and differential treatment of emerging economies, and international food aid. Further progress has been limited.

The purpose of the WTO system is to provide for the negotiation and progressive liberalization of trade barriers over time. Consideration could then be given to the establishment of a revised form of open international trade regime based on a Global SMART Market (GSM) system which would be based on a single market trade model. This system would operate like the GIFT or a separate GREAT and promote open, free trade based on a Free International Tariff, Trade and Equivalents Regime (FITTER) or a Free Advanced Structured Trade Efficiency Regime (FASTER). Such a regime would adopt an aggressive liberalization policy with a target of no or minimum tariffs, quotas, or MEEs imposed on the exportation and importation of goods and services and with maximum use of technology to dematerialize customs documentation and limit filings, burdens, and delays. In this system, countries would be expected to reduce standard conditions to a minimum common set of agreed protections with maximum convergence and commonality. While market access could be managed on as much of a reciprocal basis as possible, an absolute minimum compliance condition would nevertheless be imposed with countries agreeing to comply with the wider SMARTS agenda set. Market access and participation would be conditional on such continuing adherence and compliance. The effect of this would be to build on the existing WTO regime while incorporating core elements of the European internal Single Market model including, in particular, the underlying principles of Mutual Recognition (MR), Minimum Harmonization (MH) and Home Country Control (HCC). This system would supplement existing regimes and attempt to ensure that they work more effectively in practice and in accordance with their original purpose, principles, and objectives.

Two core sets of market and trade principles could be extracted from the GATT and WTO systems and combined with the EU Single Market model to form the basis for the new Global SMART Market. Again, such principles could be considered separately or together. The market principles could, for example, consist of (a) open and inclusive trade, (b) open market access, (c) free and fair markets, (d) open pricing, (e) open competition, (f) prohibition on cross-border dumping, (g) state aid balance, (h) state control balance, (i); trade cooperation, (j) development support, (k) development sequencing, and (l) international monetary and financial stability. A further series of trade principles could consist of (a) OpenOpenconditional access (on adherence to the SMART framework), (b) non-discrimination and Most Favoured Nation (MFN) status, (c) non-discrimination and national treatment, (d) zero tariff, quota, and MME targeting, (e) progressive liberalization, (f) minimum harmonization of standards (MHS), (g) home country control (HCC) or country of origin (COO) control, (h) restricted general good on national interest derogation, (i) special and differential (S&D) treatment for developing and emerging economies, (j) controlled contingency measures, (k) enhanced surveillance and conditional access enforcement mechanism, and (l) structured dispute settlement within the WTO framework and continuing revision and review.

The global trading system would suffer if trade between the major countries was damaged by nationalist retreat and diplomatic uncertainty as well as major market fragmentation. Countries should avoid isolationism, especially in relation to trade, capital flows, innovation, and global institutions. Countries should avoid adopting “techno-nationalist” policies, indigenization, and technological sequestration. The G20 could assume a leadership role in 2021–2022 and commit to the proposed market principles in order to build a sustainable economic future based on effective global rules governing trade, investment, intellectual property, and technology standards, as well as other systemic threats including terrorism, cyber warfare, climate change, and nuclear proliferation. International Financial Institutions (IFIs) and multilateral organizations must be strengthened rather than undermined to develop a sustainable, global, economic order.

The objective is to agree to a set of core minimum standards and principles that all countries could adhere to. An immediate attempt could be made to secure a substantial initial reduction in residual barriers, especially in medical equipment, supplies, vaccines, and other core foodstuffs to promote trade and economic growth and development in developed countries and emerging economies. This would again operate on the basis of a new form of neo-functionalism.

F. Atmospheric and Climatic Control

A parallel set of absolute, minimum standards could be agreed upon in the area of atmospheric and climate control. Such an idea has attracted significant attention with the continued substantial rises in global climate temperatures. This rise is principally driven by increasing anthropogenic greenhouse gas (GHG) levels from emissions such as carbon dioxide, methane, halogens, nitrous oxide, and other gaseous compounds. The Intergovernmental Panel on Climate Change (IPCC) in 2018, as well as other studies, have concluded that the dominant cause of observed global warming has been human influence on the climate. Anthropogenic factors are clearly either direct causal conditions or aggravating contributions. Any origin arguments are not relevant in any responsibility debate here. Greenhouse gases are generated by the burning of fossil fuels, including oil, gas, coal, and wood, as well as from agriculture and deforestation which limit the absorption of carbon dioxide (CO2). Global warming creates extreme weather conditions and disrupts natural water cycles, thereby producing more droughts and floods. Climate conditions must be managed to maintain the continued habitability of the earth and the operation of any minimum social and market systems. Again, this could be referred to as a form of minimum contingent or systemic market functionalism, which could, without minimum protections, underlying social, financial, and physical systems, collapse. It is possible to construct an effective new common global response in this area.

The United Nations Framework Convention on Climate Change (UNFCCC) was entered into in 1992 to limit human interference with the climate system. The Kyoto Protocol to the Framework Convention was finalized in 1997 and countries entered into emission commitments. A Copenhagen Accord was produced in 2009 to limit future temperature increases to below two degrees C. The Paris Climate Agreement was entered into on December 12, 2015 to establish a procedure for setting and assessing goals and assisting developing countries entrance into the framework. The 2020 United Nations Climate Change Conference (UNCCC) was to be held in the U.K. in November 2020, but was postponed until 2021.

A series of responses and solutions has been produced as part of these different measures in the climate area. Several minimum core principles and objectives could be extracted from these various responses. These minimum principles could include: (a) open and inclusive participation based on the principles of sovereign autonomy, sovereign territorial and resource exclusivity, and sovereign responsibility; (b) industrial, developmental, and energy resource assessment and fairness; (c) Nationally Determined Contribution (NDC) identification and progressive NDC reduction; (d) minimum two degree Celsius target and net zero emissions; (e) stocktake and ratcheting mechanisms; (f) mitigation and carbon markets to limit and manage carbon production; (g) development of consistent sustainable development and adaptation policies; (h) adoption of aggressive damage limitation polices; (i) provision of substantial financial assistance packages; (j) development of carbon conversion, carbon absorption, and safe storage technologies with increased technical cooperation; (k) promotion of education and public awareness with trust and confidence; (l) capacity building with the construction of appropriate institutional structure and proper and timely ratification and entry. This creates a twelve point core set of minimum climatic or atmospheric controls and standards which could be incorporated into a Climate Protocol supported by relevant guidance and bridge documentation. This core set of principles would connect the new Protocol with existing measures in place. Preparing a separate energy protocol could be considered, although all the key contents of this are essentially provided for in the measures proposed which could be supported by more specific supporting climate protection and energy guidance.

Development assistance may be closely connected with the issue of climate management. A further supporting development or emerging markets agenda could be constructed in parallel with the climate programme. The objective would be to confirm all relevant objectives, rights, entitlements, and interests and to set these in a dedicated “Sustainable Assistance, Finance and Engagement” (SAFE) programme and implement SAFE or SAVE Protocol. Such a programme could restate and consolidate the SDGs and other development objectives referred to above. While the SMARTS agenda could focus on climate impact, STARTS could incorporate a series of new development principles based on SAFE and SAVE.

G. Regulatory Control

It is essential to ensure that financial markets are subject to effective continuing oversight and control. The global financial crisis confirmed the difficulties that can arise when new uncontrolled activities arise between or outside traditional markets and the scope of the existing micro or legacy regulatory framework. A substantially strengthened and enhanced set of measures, in particular, in the banking, securities, and insurance areas had to be adopted following the crisis. Hard law and regulation must nevertheless include an appropriate set of high level standards and be supplemented through an effective official or market and self-regulatory ethical framework.

A consolidated set of financial or regulatory principles can accordingly be constructed to ensure that firms respond properly and behave effectively in new market areas. Many countries already require financial firms to comply with certain general principles. These are, for example, set out in the UK by the Financial Conduct Authority (FCA) in its Principles for Business (PRIN). These consist of eleven core principles that all firms are required to comply with. A parallel but simplified set of provisions apply to individuals under the earlier FCA Approved Persons code (APER), which has been replaced by COCON. A slightly revised version of PRIN was adopted by the Prudential Regulation Authority (PRA) to reflect its responsibility in respect of firm stability. These provisions were originally based on standards produced by the Securities and Investments Board (SIB) proposed in March 1990 and adopted in January 1991. These were partly reused by the International Organisation of Securities Commissions (IOSCO) in December 1990. Many of these were originally derived from underlying concepts of English Common Law and Equity.

Some issues remain with regard to PRIN in that these mix conduct and ethical with more prudential, protective, and prohibitive provisions. The major omission that arises is with regard to the absence of any complete guidelines on the meaning and application of these principles in practice. It is still possible to produce a consolidated set of core financial ethical principles that firms could be required to comply with at the international level. All financial firms would have to agree to operate in accordance with these standards.

A condensed or consolidated set of principles could consist of the following: (1) Integrity; (2) Skill, Care and Diligence; (3) Management, Control and Systems; (4) Financial Resources and Prudence;(5) Proper Market Conduct; (6) Respect Clients’ Interests; (7) Respect Client Communications; (8) Protect Client Assets; (9) Protect Client Trust; (10) Avoid Conflicts of Interest; (11) Continuity Planning and Resolution; and (12) Full Regulatory Compliance and Cooperation. This can be summarised in terms of the Commitment, Care, Control, Capital, Conduct, Consideration, Choice, Caution, Confidence, Consent, Coordination, and Cooperation.

Regulation can also be considered in terms of wider global governance reform. Specific concerns have, for example, arisen about the composition, mandates, roles, and activities of major international financial institutions (IFIs), such as the IMF, World Bank Group, and regional development banks (RDBs). The core IFI architecture was established under the Bretton Woods Treaty system agreed around seventy-five years ago in July 1944. A set of new guiding principles could be agreed concerning the composition and operation of IFIs and in respect of country relations in modern more integrated, interconnected, and interdependent technology driven markets. This could be set out in a further governance protocol within STARTS with financial ethics built into SMARTS. This would effectively create a standard of parallel ethical principles for country relations and country adoption.

H. Technological Control

It is possible to construct a parallel set of technology-directed principles. The philosophy of technology is generally concerned with examining the impact of technology on social values and structures. The technology of ethics has been referred to as “technoethics,” and has been used to identify rules to support science and technological progress. Ethics in technology examines technology related ethical concerns. The ethics of technology can, for example, be considered to include around twenty separate areas of concern. Technological determinism attributes changes in social value and structure to technology and explains social structure in terms of technology. Technology-related ethics can include the design and use of technology (“robot ethics”) or the conduct of the technology created (“machine ethics”) and the effect and impact of artificial moral agents (AMAs). Three laws of robotics were developed by the American writer Isaac Asimov in 1942 based on the concepts no injury, obedience, and no conflict.

Many different sets of ethical agendas have been adopted or are proposed in the technology area. A number of major BigTech companies established a non-profit, Partnership on Artificial Intelligence to Benefit People and Society, in 2016 to promote understanding of artificial intelligence (AI). The OECD has produced five values-based principles for responsible use of AI. An EU High-Level Expert Group on Artificial Intelligence (AI HLEG) produced a list of seven key requirements on AI systems and recommended that AI systems be lawful, ethical, and robust. The HLEG has also produced a set of thirty-three recommendations to promote sustainability, growth, competitiveness, and inclusion. The European Parliament adopted a resolution on Civil Law Rules on Robotics in February 2017. It included a recommendation to adopt an instrument governing establishing civil law rules on the liability of robots and AI. The resolution applies to cyber physical systems, autonomous systems, smart autonomous robots, and other subcategories. An EU agency for Robotics and Artificial Intelligence was to be created with a registration system, code of conduct for robotics engineers, research ethics committee (REC) code, and model designer licences. The European Parliament also considered confirming the legal status of electronic persons although this was rejected by other parties.

The Institute of Electrical and Electronics Engineers (IEEE) established a Global Initiative on Ethics of Autonomous and Intelligent Systems which produced eight general principles within the first edition of its Ethically Aligned Design principles. The US Computing Community Consortium (CCC) and the Association for the Advancement of Artificial Intelligence (AAAI) have produced a separate proposed 20 Year AI Roadmap. Research and collaborative work has also been taken forward by OpenAI which was originally set up by Elon Musk, Sam Altman, and others in December 2015.

From a legal perspective, a number of difficult issues arise regarding technology and specifically responsibility and liability in terms of the ethics of technology and AI ethics in particular. Clear sets of liability rules must be determined by legislatures, especially in potential areas of possible loss of human life and injury. A general rule of user liability should be considered in such cases to allocate responsibility effectively with supporting principles to avoid people denying liability in situations that their machine use created. Similar moral difficulties arise with regard to the use of “Lethal Autonomous Weapons” (LAWs) or “Weapons Assisted Responses” (WARs). Where all relevant options have not been properly programmed in accordance with agreed legal and regulatory standards and moral conflicts still arise, machine or autonomous functions should be capable of being cancelled with the human re-assuming control for the activity.

Difficulties also arise regarding Artificial Moral Agents (AMAs) and whether machines can assume or be programmed with a sense of moral responsibility or direction through coding. Moral agency refers to the ability to make decisions based on moral judgements. It is arguable that machines should never be required or able to make such discretionary moral judgements based with this remaining a human function outside pre-programmed code parameters where the applicable rules are clear. Liability for machine action and results should generally remain with the machine user except where separate fault may be attributed to a manufacturer or programmer. Difficult issues may still arise especially following the “singularity,” when machines are able to outperform humans in equivalent functions. A further underlying issue involved is whether machines can assume a self-preservation (and self-replication) function that may conflict with human direction, instruction, and control.

In response to all of these technology related issues and concerns, a number of core principles can be extracted to create a basic code of conduct for roboethics and machine ethics. A basic distinction can be drawn in this area between infrastructure, or access, rights and applied, or substantive, rights. Access rights can correspond with digital or network rights. These may be considered to include the following: (a) Network access; (b) Network equality; (c) Network neutrality; (d) Network Security; (e) Network data control; (f) Network freedom of expression; (g) Network respect; (h) Network compliance; (i) Network liability; (j) Network open regulation; (k) Network open governance; and (l) Network continuity. Other countries have been considering adopting further Internet use or digital platform laws. A separate set of provisions could be incorporated within the same Access protocol governing platforms, including specific new competition law protections as these evolve.

A parallel set of substantive rights and principles can be developed to govern the use and application of technology. This could consist of: (a) Human agency control and oversight, as well as direction and delivery; (b) Human purpose and values; (c) Design and technology security and safety; (d) Precautionary principle; (e) Controlled gene editing; (f) Controlled self-awareness and consciousness creation; (g) Controlled irreversibility; (h) Controlled self-correction; (i) Controlled self-replication; (j) Legal and regulatory compliance and accountability and liability; (k) Legal and regulatory responsibility and human liability; (l) Suspension or cancellation; and (m) Continuing review and reprogramming. All of these could be simplified and incorporated into the new framework within a Technology Protocol and supporting architecture documentation.

I. Security Control

It is further necessary to create an appropriate institutional structure and security framework. To date, this is formally based on the United Nations (UN) architecture with the UN Charter having been agreed at a San Francisco Conference on June 25, 1945. This confirmed the objectives of the Charter with six principal agencies or operations being established subsequently.

Several core standards can be extracted specifically from the purposes and principles of the UN as set out in Articles one and two of its Charter. These essentially consist of: Maintaining peace and security; Developing friendly relations; Promoting international cooperation; Harmonisation; Sovereign equality; Good faith adoption; International settlement of disputes; Non-aggression; Mutual assistance; Extended application; National subsidiarity; and continuing application.

These ideas are supplemented by other general principles of Public International Law. This would specifically include the Laws of War which apply both with regard to the right to enter into war (jus ad bellum) and conduct during war (jus in bello). These include international treaties and the laws of war, custom, and other general principles of Public International Law. A significant number of treaties, declarations, conventions, resolutions, and other documents apply. Two of the most important sets of these consist of the Hague Conventions of 1899 and 1907, which are concerned with the laws of war, disarmament, and war crimes as well as establishment of the Permanent Court of Arbitration (PCA), and the Geneva Conventions in 1949 covering the humanitarian treatment of prisoners and civilians. The use of chemical and biological weapons were banned under a Geneva Protocol in June 1925 following the use of mustard gas during World War I. The production, storage and transfer of biological and chemical weapons is dealt with under two subsequent treaties in 1972 and 1993. A general Treaty on the Prohibition of Nuclear Weapons (TPNW) was produced by the UN on July 7, 2017, although this has still not come into effect due to insufficient ratification.

Separate measures have been adopted on excessively injurious or indiscriminate effects weapons, landmines, cluster munitions and child protection. Attention has more recently focused on the use of remote-controlled weaponry and robotic weapons which use human guidance and non-human autonomous weaponry. These can be considered, for the purposes of this paper, to cover lethal autonomous weapons (‘LAWs’) including lethal autonomous robots (‘LARs’), bio-autonomous systems (‘BASs’), nano-autonomous systems (‘NASs’ or ‘nano-LAWs’), remote weapon systems (‘RWSs’) and fully autonomous and self-preservation weapon systems (‘AWSs’). A ban was proposed on the use of autonomous weapons at the 24th International Joint Conference on Artificial Intelligence (IJCAI-15) in Buenos Aires in July 2015.

A number of general principles can again be extracted from this to govern the use of war and warfare. These may, for example, include: (a) Proper justification or military necessity; (b) Legitimate military objective; (c) Proper distinction between combatants and civilians; (d) Proportionality; (e) Disclosure; (f) Surveillance; (g) Humanitarian assistance injured; (h) Nuclear non-proliferation; (i) Remote weaponry controls; (j) Lethal Autonomous Weaponry (LAW) bans; (k) War crime prosecution; and (l) Adherence and Review. The objective would be to create a clear and concise set of applicable minimum principles and standards for application in all cases. These could be set out in an appropriate protocol under the SMARTS framework with a parallel set of crisis management measures (or Safety) included within the STARTS agenda.

J. Emerging Economies and Development Finance (FIRST, SAFE and SAVE)

It is possible to create a supporting financial and technology-specific agenda for developed and emerging or developing economies to ensure proper and targeted investment, research, and delivery. This could be set out in a new ‘Financial, Investment, Regulatory, Social and Technology’ (FIRST) agenda. This could incorporate, or be cross-referred to, many of the earlier sets of core objectives referred to in each of these areas.

Emerging markets and economies also have specific special needs that have to be managed on a continuing basis. These could be supported under a dedicated ‘Sustainable Assistance Finance and Engagement’ (SAFE) programme with a further ‘Sustainable Assistance and Value Enterprise’ (SAVE) agenda for climate protection. A large number of initiatives have been adopted in this area on core human rights and development rights. The most significant of these are the extended Sustainable Development Goals (SDGs), which replaced the earlier Millennium Development Goals (MDGs). A large number of further international agreements have been agreed in this area. A number of important initiatives are continuing which consist of various core objectives and supporting policy areas.

The particular challenge that arises in the emerging market area is moving from the production of continuing reports and reviews, which often simply replicate and cross-refer to each other, to securing actual delivery and results which is dependent on underlying political will and necessary commitment, engagement, and funding programmes in practice.

K. Market Technology and Protocol Framework (PASS, METAL and GILT)

The overall objective of the proposed protocol programme would be to codify all core objectives, principles, and standards in each of the key areas identified. Much of this involves separate and distinct complex areas of domestic and Public International Law, which has become increasingly specialist, opaque, and non-transparent. It is necessary to attempt to draw all of this together into a clearer, integrated, and accessible framework for action that would allow effective and targeted responses to be developed irrespective of the specific cause or threat concerned. The underlying objective in all cases would be to maintain certain core minimum standards and principles. Rather than attempt to set these out in any new treaty arrangements, substantive provisions could be included within the series of crisis management and other essential standards protocols adopted under a GIFT or FIRST Treaty and general Public International Law.

A number of different types of Protocols may be used with some of these being specified as being directly enforceable where appropriate agreement can be secured. While all Protocols may not be directly enforceable, these would still be subject to an implied obligation to adopt and adhere to them breaches would be sanctioned by losing market access and privileges. This would be given effect under the Protocol Adaptive Safety and Security (PASS) regime.

All of this may be considered to confirm the importance of such core doctrines as the ‘Rule of Law’ (summarised as ‘ROLE’ under this paper). Rule of law is concerned with the authority and influence of law in society, with everyone being subject equally to publicly disclosed legal codes and processes. The rule of law was recognised by Aristotle and Cicero. The Anglo-Saxon King, Alfred the Great (1847-1899) consolidated earlier codes of conduct in the Doom Book in 893AD. The Rule of Law was used by the Scottish theologian, Samuel Rutherford, to argue against the divine right of kings in Lex, Rex (Law is King). The English philosopher, John Locke, confirmed that freedom was defined in terms of the laws imposed by the legislature. The English constitutional theorist, Albert Venn Dicey (1835-1922), stressed the sovereignty of Parliament and the supremacy of the law. A separate summary of core legal directions and provisions could be set out in this protocol for the purposes of this paper. This would confirm all minimum rights and protections.

All of this could be drawn together to create a new Protocol standards architecture made up of a series of primary and secondary standards, technical protocols, schedules and annexes, definitions and guidance, bridges, and supplements. The core sets of rights, protections, and objectives would be set out in the protocol programme discussed above. This could consist of regulatory, policy, crisis management, SMARTS or STARTS, and institutional protocols. Bridge documents, or bridge sections within protocols, could be used to connect the summary core provisions with underlying original international treaty or domestic provisions. All of the underlying core international and domestic documents could be listed in an electronic or virtual Compendia of Standards on the model of the FSB provisions governing banking, securities, and insurance markets. An additional virtual Directory could also be created by implementing domestic provisions, which would be appropriate. Additional information and details can be set out in schedules, annexes, or other supplementary documentation. Countries could confirm implementation through the use of Adoption and Adherence Letters.

L. New Global Treaty Model (GIFT)

All of these separate measures can be drawn together into a single international treaty framework. This has been referred to as the Global Investment, Finance and Trade (GIFT) Treaty, with a possible supporting ‘Global Reciprocal Economic Area Treaty’ (GREAT), which could form the basis for the new Global SMART Market system. GIFT could be considered to create a form of Bretton Woods III Treaty system following the original Bretton Woods Treaty agreed in July 1944, which created a new international monetary order following World War II. This was followed by proposals to create a form of ‘Bretton Woods II’ after the global financial crisis, in particular, at the April 2009 London G7 Meetings, although this never formally materialised. This could also be referred to as creating a new form of “Fifth Industrial Revolution” (FIR) following the earlier First and Second Industrial Revolutions in the 1700s and 1800s, the post-World War II Information or Digital Revolution and proposals for a Fourth Industrial Revolution, in particular, to realise the potential benefits of new technology. The Fifth Industrial Revolution is used for the purposes of this text to refer to the creation of a new sustainable, managed, adaptive, responsible and technology driven (smart) global control framework based on carbon neutral production, replanting, regeneration, recycling and reuse rather than dilution, consumption, and exhaustion.

The GIFT framework would operate on a flexible and dynamic basis. International treaties can be difficult to agree to as countries are reluctant to surrender significant areas of control, especially where these are concerned with, or sensitive to, national sovereign identity issues. International treaties can take a considerable time to negotiate, with many countries insisting on derogations and exceptions that are then costly to amend with potentially only limited implementation, sanction, and enforcement mechanisms available. The inherent difficulties that arise with formal Public International Law treaty models have to be recognised and accepted.

The GIFT solution would create a core international framework within which a new protocol system referred to above would operate and, in particular, under the PASS framework proposed. As much detail as agreeable and acceptable would be included within the treaty terms directly, although a flexible approach would be adopted to avoid unnecessary delay or collapse in negotiations with further technical detail being set out in the protocols and supporting guidance. The core underlying need is to create a larger framework within which the new standards recommended can be understood and applied over time. The GIFT treaty, at minimum, only has to create core objectives, disclosures, and monitoring frameworks with a supporting institutional structure. Much of this can then be achieved through the re-use of existing IFIs, inter-governmental organisations (IGOs), and non-governmental organisations (NGOs). A significant part of the GIFT Treaty would operate by way of supplement and amendment to other existing international treaties and relationship systems. The underlying objective would be to create a core institutional structure within which the new framework could operate. The substantive content could be set out in the separate crisis management, and SMARTS protocols could be adopted and applied.

The principal sanction would be based on a combination of official implementation, monitoring, and reporting supported by social media and public approval or disapproval with the threat of denial or removal of market access. Countries and governments would be encouraged to adhere and implement the standards as quickly, rigorously, and consistently as possible. This would then be reported to monitoring bodies and reflected in the metrics disclosed. All of this would be subject to the glare of continuing press and media coverage and the power of social media comment and public opinion. A supporting dispute settlement mechanism could be set up to provide interpretative and advisory decisions or rulings. The underlying principle would nevertheless be for the system to operate based on mutual self-interest and self-regulation, with the threat of contingent withdrawal of participation and involvement.

X. Global Market and Regulatory Close

Crises can cause substantial market and social disruption. This may arise as a result of a wide series of internal or endogenous and external or exogenous threats beyond traditional examination and analysis. This creates massive levels of uncertainty and unpredictability that are inherently difficult to model and manage. Governments and regulators cannot prevent instability and crisis. Instability to a significant extent only reflects natural cyclic effects with crisis representing more substantial disruptions within this. Governments and authorities have to focus on absorption, resilience, and continuity where outright prohibition or prevention would not be possible to secure or achieve in practice.

The most significant disruptions can arise with regard to exogenous shocks that may be triggered by various human or anthropogenic, biological, or natural causes and conditions. These can be more devastating as these would impact a wider array of industries, markets, sectors, social and community functions, and activities. The occurrence of such incidents again cannot be prevented with a necessary response being based on absorption or containment, systems preservation, and resilience with managed continuity of function. The global financial crisis demonstrated the extent of the monetary loss and damage that can be inflicted on an economy. The 2020–2021 coronavirus crisis confirmed the wider social impact and damage that external or exogenous shocks can cause.

It is possible to create a sustainable, managed, adaptive, recurrent, and targeted (SMART) conditional or contingent framework based on a series of core underlying rights, protections, and objectives for the modern world. These would be set out in a series of dedicated technical regulatory, policy, crisis management, institutional, and SMARTS and STARTS protocols. A supporting extended documentation architecture could be constructed. All of this would be given effect through a strengthened international GIFT Treaty framework, which builds on existing agreements and relations but also allows this to work on a more integrated, effective, and progressive manner.

The new opportunity and new challenge that arises is to combine immediate crisis correction with further and future new agenda construction. It is possible to build a wider and more complete framework to incorporate all of the other essential continuing common causes of concern at the international level, and to construct a new more relevant, effective, complete, and comprehensive global reform programme.

This new framework would respect the fundamental rights of men and women. It would promote open free markets and unobstructed international trade. It would provide essential climatic protections and build sustainable green economies with zero carbon production and consumption systems. It would adhere to specified high level regulatory and ethical principles in finance and governance in both private and public markets. It would adopt a new technology related design and management control framework and supporting ethical agenda. It would maintain collective peace and security in accordance with agreed common minimum standards and humane and responsible conduct. All of this would operate within an appropriate extended treaty and institutional structure.

We have created a new world with new possibilities because of continuous, real-time contact, communication, and connection. This, in turn, creates essential inter-dependence and fundamental mutual reliance. Market-specific and wider social crises can have common causes that result in common loss or common damage based on common interest and common threats. This creates an underlying system of common identity and common commitment, which can only be managed or contained through common or collective responsibility, action and activity supported by the necessary political engagement, and full social and public involvement and participation. We can build a new direction and a new future.