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See detailReinforcing Supranational Bank Regulation, Supervision, Support and Resolution in Europe: Introduction
Howarth, David UL; Schild, Joachim

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 ▲]

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See detailThe difficult construction of a European Deposit Insurance Scheme: a step too far in Banking Union?
Howarth, David UL; Quaglia, Lucia

in Journal of Economic Policy Reform (2018), 21(3), 190-209

The German Government refused to accept the development of a European Deposit Insurance Scheme (EDIS) for Banking Union member states. Publicly, the German Government was preoccupied with the creation of ... [more ▼]

The German Government refused to accept the development of a European Deposit Insurance Scheme (EDIS) for Banking Union member states. Publicly, the German Government was preoccupied with the creation of a moral hazard that common funds would create for banks in those participating countries that had weak banking systems. This paper argues that to understand German moral hazard concerns it is necessary to look beyond the ideational – notably concerns stemming from German Ordo-liberalism – and focus on the existing national institutional arrangements that the German Government sought to protect. German moral hazard concerns stemmed from the fear that well-funded German deposit guarantee schemes (DGS) – especially those of small savings and cooperative banks – could be tapped to compensate for underfunded (and largely ex post funded) DGS in other member states. We thus demonstrate that the difficulties facing the construction of an EDIS owe to the weakness of the previously agreed harmonization of national DGS. This failure to harmonize schemes beyond a low minimal standard can be explained through an analysis focused on national systems. Different existing national DGS stem from the different configuration of national banking systems, the longstanding relationships among national banks and well-entrenched regulatory frameworks. [less ▲]

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See detailSpecial edition on constructing Banking Union: Introduction
Howarth, David UL; Schild, Joachim

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 ▲]

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See detailInternational law as a Negotiation tool in Banking Union; the case of the Single Resolution Fund
Asimakopoulos, Ioannis UL

in Journal of Economic Policy Reform (2018)

EU’s response to the recent Euro-crisis has involved a mixture of EU and international law, with the latter being linked to all the arrangements that may have fiscal implications for national Member ... [more ▼]

EU’s response to the recent Euro-crisis has involved a mixture of EU and international law, with the latter being linked to all the arrangements that may have fiscal implications for national Member States. The SRF embodies all the controversial characteristics of Banking Union. This article illustrates the legal implications that this political choice creates, and how the interrelation between the SRM, the SRF and the ESM, allows leading economies, including Germany, to control the resolution framework both before and after crisis. This raises questions as to the direction that European Integration is taking and its highly nationalised character. [less ▲]

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