Moral hazard; financial stability; Banking Union; Bundesbank; European Central Bank
Abstract :
[en] 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.
Disciplines :
Political science, public administration & international relations
Author, co-author :
Pierret, Laura ; University of Luxembourg > Faculty of Humanities, Education and Social Sciences (FHSE) > Department of Social Sciences (DSOC)
Howarth, David ; University of Luxembourg > Faculty of Humanities, Education and Social Sciences (FHSE) > Department of Social Sciences (DSOC)
External co-authors :
no
Language :
English
Title :
Moral Hazard, central bankers, and Banking Union: professional dissensus and the politics of European financial system stability
Publication date :
March 2023
Journal title :
Journal of European Integration
ISSN :
1477-2280
Publisher :
Routledge, United Kingdom
Special issue title :
Banking on Europe: Reinforcing the Unstable Pillars of European Banking Union at Ten
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