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virtual world murder – real world consequences October 24, 2008

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It seems that a women has been arrested in Japan for using a borrowed (without consent) password to access Maple Story and kill the avatar who had just divorced her avatar, because she was extremely angry about the divorce. The news story headlines describe this as “online ‘murder'” (Guardian) although the text of the stories makes it clear that she was arrested for the hacking, rather than for the murder – a much less interesting – even uninteresting – story, as the article in the Independent (headlined with a reference to “murder by mouse”) points out, as does Greg Lastowka at Terranova. The Guardian article states that:

Bad online behaviour is usually dealt with within the rules set up by online worlds, which can ban miscreants or confiscate their virtual possessions…virtual crimes can also have consequences in reality.

This seems to me to miss the point if the arrest is for the hacking (a real world act, if you like) rather than for the avatar destruction.

The Fox news version of the story makes a link with other examples where “virtual lives have had consequences in the real world” – and here there is perhaps more to say. Rejection in a virtual world may be harder to take than participants might anticipate. But the purpose of the news stories seems to be the usual virtual world sensationalism rather than anything real. Is this really a more interesting story than if a spurned partner slashes her ex-partner’s suits? And is it more appropriate for criminal law enforcers to intervene in a domestic dispute involving hacking than in one involving hacking jackets?

On the other hand, perhaps we need the distraction of stories like this in the middle of the financial market rollercoaster ride.

forthcoming symposium at um October 20, 2008

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The Jean Monnet Chair and the Miami/FIU European Union Center of Excellence are holding a symposium on Europe’s Constitution: the EU Treaties on Tuesday, November 18, from 3:30-6:30 PM in Merrick 307, at the University of Miami. Speakers include Finn Laursen of Dalhousie University and the Consuls General of France, Italy and the Netherlands.

eu proposed revisions to depositor protection October 16, 2008

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The Commission has published proposals to revise the deposit guarantee schemes directive, which are designed to implement the Council’s recent decisions. The document notes that normal processes have been distorted in current emergency conditions:

Due to the urgency of the matter, neither an impact assessment nor a public consultation could be carried out for the current proposal.

Immediately after recognizing this failure to follow normal processes, the Commission points out in the proposal that it has been thinking about deposit guarantee schemes for the last couple of years or so. But that thinking isn’t very relevant, as it seemed to lead in a direction different from the one in which we are now travelling.

In late 2006 the Commission published a Communication which addressed the issue of coinsurance in this way:

At this stage, there would appear to be insufficient support to introduce any short-term change to co-insurance rules. In general, there seems to be no agreement among stakeholders about whether the underlying principle of moral hazard, (i.e. the risk that, because their deposits are insured in any case, depositors choose a bank without first assessing its soundness) justifies its application. Some consider co-insurance an indispensable element in preventing moral hazard, while others, in particular consumer associations, argue that depositors should not be placed in a position whereby they are expected to judge the soundness of the credit institution.
In the light of these dissenting views, the Commission is not convinced that at this stage a change to the co-insurance rules would be justified.

The new proposal addresses the coinsurance issue as follows:

This has proven counterproductive for the confidence of depositors and may have exacerbated the problems. The argument of moral hazard (depositors should be ‘punished’ if they deposit their funds at a bank offering high interest rates but incurring high risks) is not tenable since retail depositors cannot, in general, judge the financial soundness of their bank. Consequently, this option should be discontinued.

proposed revision of eu consumer protection October 9, 2008

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Shopping doesn’t seem to be most people’s top priority in current market conditions. But perhaps this means that it is a good time to think about consumer protection. The Commission published yesterday a new proposed consumer protection directive to collect and revise existing EU consumer protection rules. The proposal is designed as a “full harmonisation” measure. Article 4 states:

Member States may not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection.

This is supposed to mean that traders can use the same contract terms in all Member States. At the same time consumer protection is increased in some respects. There are new lists of banned terms in consumer contracts (a black list) and of terms which are presumed to be unfair (a grey list). The proposal has some relevance to financial services, but does not apply to circumstances covered by the Distance Marketing of Financial Services Directive or the Consumer Credit Directive.

competitive depositor protection October 5, 2008

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Depositor protection has been a subject of controversy in the EU before now (for example, the negotiations which led to the adoption of the deposit guarantees directive). But no sooner had Peter Mandelson taken the helm of the Department for Business, Enterprise and Regulatory Reform (the “Voice for Business Across Government” – Better Regulation Department) (a very apt appointment, as he has direct, personal, experience of some of the causes of current financial market turmoil – misleading disclosures/non-disclosures to mortgage providers) than Germany announced that it was going to improve protections for depositors with German banks. It’s just not cricket.