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   Moral Hazard, central bankers, and Banking Union: professional dissensus and the politics of European financial system stabilityPierret, Laura  ; Howarth, David in Journal of European Integration (2023), 45(1), 15-41 Banking Union was a major policy response to the financial crisis that began in 2007 and the subsequent Eurozone crisis. Moral hazard has frequently been presented as a major cause of these crises ... [more ▼] Banking Union was a major policy response to the financial crisis that began in 2007 and the subsequent Eurozone crisis. Moral hazard has frequently been presented as a major cause of these crises. Therefore, Banking Union can be understood as a response to moral hazard in relation to banks and sovereigns. Yet, moral hazard was an acknowledged and supposedly managed problem prior to these events. Paradoxically, moral hazard has been used to justify contradictory policy options to safeguard European financial system stability, such as decentralized institutional arrangements for banking supervision but also a centralized system coordinated by the European Central Bank (ECB). To address this paradox, this paper investigates moral hazard as a political concept. Based on a comparison of how central bankers from the Bundesbank and the ECB understand and use the moral hazard concept, this paper argues that moral hazard is closer to the realm of politics than expertise. [less ▲] Detailed reference viewed: 41 (0 UL)Fighting Fires from Crisis to Crisis: The Evolution of Central Banking in Europe; ; Pierret, Laura in Costa, Olivier; Van Hecke, Steven (Eds.) The EU Political System After the 2019 European Elections (2023) The year 2019 ushered in the end of an era for the European Central Bank when Mario Draghi stepped down as ECB President. The financial crisis left a legacy of central banks as “the only game in town” ... [more ▼] The year 2019 ushered in the end of an era for the European Central Bank when Mario Draghi stepped down as ECB President. The financial crisis left a legacy of central banks as “the only game in town”. The COVID-19 pandemic reinforced the role of central banks as critical firefighters during crises, in contrast to earlier periods. This contribution examines the evolution of central banking in Europe. First, it evaluates the ideational shifts that allowed for a more expansive interpretation of the role of a central bank. Second, it looks at the ECB’s response to the Covid-19 crisis and assesses the underlying reasons why the use of the bank’s balance sheet is here to stay. Third, it looks at these issues in a comparative perspective, contrasting the issues and policy responses faced by the ECB to those of the Bank of England and the US Federal Reserve. The final section concludes. [less ▲] Detailed reference viewed: 15 (1 UL)The political use of the term "moral hazard": evidence from policymakers of the EurozonePierret, Laura E-print/Working paper (2019) Detailed reference viewed: 71 (16 UL) |
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