Chapter 2 set forth two main points: [1] the system of Nation States, inherited from the 1648 Treaty of Westphalia, prohibits the existence of a seamless global financial system, and [2] Nation States use financial systems for political purposes. The result is twofold: finance and politics are inextricably intertwined, and second financial systems are fragmented because of un-harmonised Nation State regulation. Chapter 2 also provided information on several supra-national institutions presumably functioning as caretakers of the global financial system. The material here provides additional resources and raises additional questions related to the Chapter's topic.

Regulatory Systems of Nation States Prohibit Creation of a Global Financial Marketplace
There are more than 200 countries in the world. Most have distinct regulatory frameworks applicable to financial firms and financial markets. The lack of rule harmonisation makes it impossible for a single entity to build and operate a single financial platform providing services across the globe. Financial regulations are predicated upon numerous policies; e.g., [1] consumer protection, [2] systemic financial stability, [3] orderly and transparent markets, and [4] avoidance of financial system abuse. In addition, the regulatory landscape Is constantly changing.
Let us take an illustration. Suppose a financial firm, whether FinTech or not, is established in the Republic of Ireland. First, the firm must be established under Irish company law and then obtain a licence to operate from the Central Bank of Ireland. The European Central Bank is the competent authority in Ireland for granting of banking licenses under the Single Supervisory Mechanism (SSM). A credit institution means "an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credit for its own account". EBA Opinion at link. If granted, the bank is eligible to use the EU passport to conduct business in other Member States of the EU. Annex I of the Capital Requirement Directive 4 sets forth the lists of activities that may be carried by a credit institution.
Suppose that the licensed credit institution would like to expand its range of financial products to include insurance. That objective cannot be done without obtaining an insurance license. Suppose further that the CI would like to offer its products into the United States. That also is impossible without additional licensing by US authorities. Hence, this simplified illustration demonstrates the impossibility of a single firm operating a global financial service institution.
Further complicating matters are residency and other requirements applicable to potential customers of the CI. These requirements arise by law or by bank internal policy. They often are related to the implementation of policies, such as "Know Thy Customer" and "Anti-Money Laundering".
The Bretton Woods System
Bretton Woods [BW] refers to the international monetary system established at the end of World War Two whereby the US dollar, a fiat currency, became the world's international payment and reserve currency. Under BW, exchange rates were based upon a system of fixed parities operating from 1947 until 1971. The US dollar was fixed to the price of gold at $35 per ounce; other currencies were fixed to the US dollar, with an option of re-alignment when imbalance of payments persisted over time. BW also established the International Monetary Fund and the International Bank for Reconstruction and Development. The system is described in the following file. When the Bretton Woods system collapsed, the International Monetary Fund adjusted its role from watchdog of currency exchange rates, as fixed under BW to a lending facility to countries with unsustainable debt levels and critically impaired Balance of Payments statements. The second edition of the text will contain a chapter on the IMF and its lending practices and record.

However, more important than the international monetary system adopted at BW was the international monetary system proposed by John Maynard Keynes that was rejected by the US. That rejection came to haunt the current system as it exists today even considering the break from gold convertibility.
Keynes idea was to create an International Union [IU], a bank designed to facilitate international trade and avoid systemic imbalance of payments. The proposal was rejected with the following consequences: persistent global imbalance of payments, net international debt or credit positions among countries, and debt crises, even within the Eurozone.
Under the IU, member countries did not contribute fiat currency to fund the bank, as is the case with the IMF where quotas are established and member states are granted credit based on capital contribution. The IU bank created and destroyed a currency called "bancor' distinct from any existing fiat currency. Bancor served only as a "unit of account", not as a store of value or means of of exchange. Every member country had a current account with the IU with a beginning balance of zero. Credits and debits denominated in bancor resulted from trade among nations. The par value of a nation's fiat currency was expressed in bancor.
For example, assume Country A sold a good to Country B. the current account of Country A would be credited in bancor reflecting the value of the product sold to Country B. The current account of Country B would be debited for the amount of the product purchased, in effect a negative balance. But the IU was established to operate a multi-lateral, not bi-lateral clearing union. In our example, the surplus country A could spend its surplus anywhere in the world; likewise B could sell its goods anywhere in the world to restore its balance to zero or to place it in surplus.
Bancor was created ex-nihilo. However, it came into existence by the transfer of real goods. Likewise, it was destroyed by the transfer of real goods. Keynes' defined bancor: "a mere intermediary, without significance in itself, which flows from one hand to another, is received and is disposed, and disappears when its work is done from the sum of a nation's wealth". The ideal set of accounts at the IU would be a return of all balances to zero.
Since the latter outcome was not guaranteed, Keynes produced three corrective mechanisms based on the assumption that the burden of adjustment was symmetrically distributed among debtors and creditors. First, maximum ceilings were set both for debt and surplus. It was not possible for a country to increase its debt indefinitely as it was not possible for a country to accumulate credits indefinitely. Second, both debtors and creditors were subject to repayment of charges proportionate to the imbalance. Debtors paid interest on debts; but creditors paid interest on credits thereby providing an incentive to spend. Third, correction of exchange rate misalignments was permitted. If a country had a systemic deficit or surplus, the Keynes proposal allowed for devaluation or revaluation of the fiat currency to increase or reduce competition.
Keynes' plan was not adopted due to the strength of the United States economically and militarily. It held almost all the world's gold reserves. The IMF failed to incorporate many of Keynes' criteria and functions to the advantage of creditor nations. The "international monetary system" created under Bretton Woods arguably is the cause of political, economic, and military conflicts in the 21st century.
[Material to follow]

Nation States use financial systems to achieve political ends. The sanctions space is very active and changes frequently. The United States economic sanctions programme is implemented by the Office of Foreign Assets Control [OFAC]. "OFAC administers a number of different sanctions programs. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals."

Since 1976, when Congress passed the National Emergencies Act, presidents have declared at least 53 states of emergency — not counting disaster declarations for events such as tornadoes and floods, according to a USA TODAY review of presidential documents.” Most of those emergencies remain in effect. Even the emergency called by President Jimmy Carter on the 10th day of the Iranian hostage crisis in 1979 remains in effect 35 years later. Congressional oversight requires six-month reviews of the validity and necessity of the declarations of national emergency. The system of review is dysfunctional. USA TODAY states: “The United States is in a perpetual state of national emergency”. See also, Patrick Thompson, Toward Comprehensive Reform of America’s Emergency Law Regime, 46 Univ. Mich. J. L. Reform 737 (2013).

The US economic sanctions programme [SP] is daunting. As of 23 July 2021, there are 36 sanctions programmes in effect. The sanctions programme evades easy summary as each programme differs in scope and legal source. The SP ranges from specially designated nationals and blocked persons to country wide sanctions applied, for example, to Cuba. The US sanctions programme against Russia starting in 2014 exemplifies its wide ranging reach.

In 2014, the Republic of Crimea was reunified with the Russian Federation, during an illegal regime change in Ukraine, fostered with the support of the United States. Without re-producing my legal arguments as to why Russia did not illegally annex Crimea and why the reunification was lawful under principles of public international law, I explain the legal basis for the United States to apply economic sanctions against Nation States that it “considers” having acted wrongfully under public international law or contrary to the interests of the United States.

In response to events in Crimea, then President Barack Obama issued four Executive Orders : Executive Order 13660 [March 6, 2014]; Executive Order 13661 [March 17, 2014]; Executive Order 13662 [March 20, 2014] and Executive Order 13685 [December 19, 2014]. The legal basis was the US Constitution [no provision cited by the US government], the International Emergency Economic Powers Act [50 U.S.C. 1701 et seq.] [IEEPA], the National Emergencies Act [50 U.S.C. 1601 et seq.] [NEA], and section 212(f) of the Immigration and Nationality Act of 1952, and section 301 of Title 3, USC. Additional Executive Orders were issued. The legal basis rested upon the ground that Russia's re-incorporation of Crimea constituted a "national threat" to the United States.

The question arises: how the relationship among Ukraine, Crimea, and Russia poses a “national emergency” within or to the United States. Clearly, the declaration of independence of Crimea from Ukraine, the referendum held in Crimea, and Crimea’s subsequent incorporation into the Russian Federation, at Crimea’s request, fail to create “emergencies” in the United States. Arguably, these actions conflict with US foreign policy, but only on the pretext that the US does not like the foregoing sequence of foreign developments. If dislike of foreign developments qualifies as “national emergencies” in the US to invoke sanctions against Sovereign States, then federal law has bequeathed unchecked power on the US President.

Subsequently, on 2 August 2017, then President Trump signed into law a bill [H.R. 3364 entitled "Countering America's Adversaries Through Sanctions Act"] that contains sanctions against Iran, North Korea, and the Russian Federation. Matters related to the Russian Federation are the sole focus of this Article. The legislation deprives the Executive branch of government from revoking, modifying, or altering existing sanctions against the Russian Federation, without the approval of Congress. In other words, the law transforms extant Executive Orders into legislation. At present, the Republic of Crimea is effectively subject to an embargo.

The European Union equally is active within the economic sanctions space as demonstrated by its sanctions map.

While this text does not cover legal implications, the question arises:are these disparate economic sanctions regimes compatible with international norms. The following resources are provided to give you a jumpstart.
1.The United Nations Charter.
1.1.First read the Preamble and Chapter 1 Purposes and Principles; then read Article 2(4) noting that "force: is undefined; follow this by reading Articles 41and 51.
2.The 1969 Vienna Convention on Treaties. The 1969 Convention contains rules on how to read and interpret a treaty. The UN Charter is a treaty.
3.The ILC's Responsibility of States for Internationally Wrongful Acts 2001. The ILC cannot make law. Their publications carry persuasive weight.

4.How do these economic sanctions regimes affect international financial services? Think in terms of compliance costs and delivery of services?