Reinforcing Supranational Bank Regulation, Supervision, Support and Resolution in Europe: Introduction

in Journal of Economic Policy Reform (2019)

A decade on since the outbreak of the worst international financial crisis since the late 1920s, the effective design of EU bank regulation, supervision, support and resolution remains hotly contested, in ... [more ▼]

A decade on since the outbreak of the worst international financial crisis since the late 1920s, the effective design of EU bank regulation, supervision, support and resolution remains hotly contested, in both academic and policy-making circles. European Banking Union (BU), one of the most important developments in European integration since the Maastricht Treaty and the launch of Monetary Union, still ranks very high on the European Union’s reform agenda. Some reform proposals, such as the creation of the European Deposit Insurance Scheme (EDIS), have been placed on the backburner given German government concerns regarding the state of bank balance sheets in some euro area member states — and, specifically, bank holdings of nonperforming loans — and that incentives for future risk-taking have not been sufficiently reduced. Other reforms affecting all EU member states have met the determined opposition of a number of national governments and powerful bank interests, including the Commission’s proposal for a regulation on Bank Structural Reform (BSR), which was dropped by the Commission in late 2017. However, there are also a range of other legislative and institutional reforms designed to reinforce EU bank regulation and supervision which have either been proposed and / or adopted. The main objectives of these reforms are to make banking safer— and specifically to diminish the systemic effects of losses resulting from high risk bank activities — and to reinforce the ability of supervisory authorities to monitor effectively bank activity. By shedding light on a number of difficult issues facing these topics, the articles of this special issue seek to provide contributions that are helpful to both academics and policy makers. [less ▲]

Special edition on constructing Banking Union: Introduction

in Journal of Economic Policy Reform (2018), 21(2), 99-110

European Banking Union arguably represents the most important step in European economic integration since the launch of Monetary Union. Little wonder, then, that this major deepening of integration ... [more ▼]

European Banking Union arguably represents the most important step in European economic integration since the launch of Monetary Union. Little wonder, then, that this major deepening of integration sparked a lively academic debate and triggered an ever-growing number of publications from different disciplinary backgrounds. The first wave of publications on European Banking Union (BU) provided us with overviews on the legal changes; they discussed at length the economic rationale underpinning BU; and they traced the political dynamics of establishing BU discussing key explanatory factors. This literature reflected BU’s foundational phase between 2012 and 2014 when the major texts enshrining BU in law were negotiated and adopted. This special issue is located at the intersection of this first phase and a second stage of research covering different topics as regards to the functioning of BU. New research questions are triggered by the — so far still limited — experiences regarding BU’s implementation and current operation. Based on this empirical evidence, contributions to this second wave of BU-related research try to identify potentially dangerous lacunae and design faults, contributing to the ongoing reform debates. Taken together, the contributions to this special issue provide us with a nuanced picture of Banking Union’s construction problems, lacunae, and governance structure design faults. Banking Union resembles an unfinished cathedral. Given its problematic architecture, there remain important stability risks. [less ▲]