European Banking Union

2017 ◽  
Author(s):  
Rachel A. Epstein
Keyword(s):  
Bank Lending ◽  
Banking Union ◽  
Bank Failures ◽  
Bank Supervision ◽  
European Banking Union ◽  
International Pressure ◽  
Banking Market ◽  
National Economic ◽  
European Banking ◽  
Communist Countries

If post-communist countries realized marketized bank–state ties through transition and international pressure to privatize their banks with foreign capital, western Eurozone states have more recently come under pressure to follow suit. European Banking Union centralized bank supervision and introduced a single resolution board at the expense of national authority. Thus under banking union, national regulatory and supervisory forbearance was curbed; barriers to banking market entry were no longer the purview of national authorities; disproportionate bank lending to one’s own sovereign would be discouraged; and bank bondholders, creditors and depositors—i.e. market actors—paid the price for bank failures first, before governments and taxpayers. While European Banking Union put the euro on stronger foundations, it also curbed national economic policy discretion and limited tools for adjustment. Taking Italy, Portugal, Spain and Germany as examples, this chapter explains why and in what policy areas Eurozone states’ sovereignty clashed with banking union.

scholarly journals The Asymmetric Implementation of the European Banking Union (EBU): Consequences for Financial Stability

2016 ◽  
Vol 50 (1) ◽  
pp. 7-26 ◽  
Author(s):  
Uwe Vollmer
Keyword(s):  
Financial Stability ◽  
Voting Rights ◽  
Banking Union ◽  
Member States ◽  
Bank Supervision ◽  
Eu Member States ◽  
European Banking Union ◽  
European Banking ◽  
Close Cooperation ◽  
European Stability Mechanism

Abstract EU Member States outside the Eurozone are hesitating to enter the European Banking Union (EBU) and to establish “close cooperation” in bank supervision with the ECB. This paper analyzes the consequences of such asymmetric integration for financial stability in Europe. It argues that the main obstacles against establishing close cooperation are a lack of voting rights and insufficient access to the fiscal backstop provided by the European Stability Mechanism (ESM). The paper presents arguments as to why international cooperation in bank supervision could be welfare improving, if multinational banks are dominant. It also discusses suitable reform options for making it more attractive for EU Member States to begin a close cooperation with the ECB.

Banking on Markets

2017 ◽  
Author(s):  
Rachel A. Epstein
Keyword(s):  
Foreign Bank ◽  
Banking Union ◽  
European Banking Union ◽  
National Economic ◽  
Bank Ownership ◽  
European Banking ◽  
Central Argument ◽  
Economic Volatility ◽  
Political Foundations ◽  
Other World

States and banks have traditionally maintained close ties. At various points in time, states have used banks to manage their economies and soak up government debt, while banks enjoyed regulatory forbearance, restricted competition and implicit or explicit guarantees from their home governments. The political foundations of banks have thus been powerful and enduring, with actors on both sides of the aisle reluctant to sever relations. The central argument of this book, however, is that in the world’s largest integrated market, Europe, political ties between states and banks have been transformed. Specifically, through a combination of post-communist transition, monetary union, and economic crisis, states in Europe no longer wield preponderant influence over their banks. In the East, high levels of foreign bank ownership have disrupted politically infused bank–state ties, while in the Eurozone, European Banking Union has supra-nationalized bank governance. Banking on Markets explains why we have witnessed the radical denationalization of this politically vital sector, as well as the consequences for economic volatility and policy autonomy. Contrary to expectations, marketized bank–state ties and elevated foreign bank ownership levels mitigated volatility in Europe’s recent economic crises. But marketized bank–state ties also limit national economic policy discretion. The findings from Europe have implications for other world regions, which, to varying degrees, have also experienced intensified pressure on their traditional models of domestic political control over finance.

scholarly journals European Banking Union and bank risk disclosure: the effects of the Single Supervisory Mechanism

2021 ◽  
Author(s):  
Yener Altunbaş ◽  
Salvatore Polizzi ◽  
Enzo Scannella ◽  
John Thornton
Keyword(s):  
Bank Risk ◽  
Banking Union ◽  
Risk Disclosure ◽  
Exogenous Shock ◽  
Bank Supervision ◽  
Single Supervisory Mechanism ◽  
European Banking Union ◽  
European Banking ◽  
Bank Disclosure ◽  
The Impact

AbstractThis paper provides evidence on the impact of European Banking Union (BU) and the associated Single Supervisory Mechanism (SSM) on the risk disclosure practices of European banks. The onset of BU and the associated rules are considered as an exogenous shock that provides the setting for a natural experiment to analyze the effects of the new supervisory arrangements on bank risk disclosure practices. A Difference-in-Differences approach is adopted, building evidence from the disclosure practices of systemically important banks supervised by the European Central Bank (ECB) and other banks supervised by national regulators over the period 2012–2017. The main findings are that bank risk disclosure increased overall following BU but there was a weakening of disclosure by SSM-supervised banks relative to banks supervised by national authorities. We also find that the overall positive effect of the BU on bank disclosure is stronger for less profitable banks and in the most troubled economies of the Eurozone (GIPSI countries), while the negative effect on centrally supervised banks is stronger if bank CEOs act also as chairmen (CEO duality). We interpret these findings in light of the fact that the new institutional arrangements for bank supervision under which the ECB relies on local supervisors to collect the information necessary to act gives rise to inefficiencies with respect to the speed and completeness of the information flow between SSM supervised banks and the ECB, which are reflected in bank disclosure practices.

From governance to government: Banking union, capital markets union and the new EU

2018 ◽  
Vol 22 (2) ◽  
pp. 205-224 ◽  
Author(s):  
Rachel Epstein ◽  
Martin Rhodes
Keyword(s):  
Financial Crisis ◽  
Capital Markets ◽  
National Level ◽  
Banking Union ◽  
European Banking Union ◽  
Banking Market ◽  
Capital Markets Union ◽  
European Banking ◽  
National Governments ◽  
Supranational Institutions

European banking union and Capital markets union have emerged as two of the key pillars of European integration since the post-2008 financial crisis. Neither were anticipated prior to the financial crisis, nor was the rapidity of their construction. Both imply the same critical shifts in Europe’s institutional political economy. The first relocates national oversight and authority to supranational institutions (a political shift), while the second increases the power and responsibility of market actors by reducing national controls (an economic shift). If banking union aims to break the hold of national governments over banking entities to foster a less fragmented and more efficient European union banking market, capital markets union aims to remove national-level impediments to a single market for capital in which jurisdictional differences are minimized, investor freedoms maximized and business gains access to a greater range of financial resources.

5. Bank Supervision in Practice: The Case of the UK and of the European Banking Union

2018 ◽  
Author(s):  
Ross Cranston ◽  
Emilios Avgouleas ◽  
Kristin van Zweiten ◽  
Theodor van Sante ◽  
Christoper Hare
Keyword(s):  
Financial Services ◽  
Financial Stability ◽  
Debt Crisis ◽  
Banking Union ◽  
Financial Policy ◽  
Regulatory Structure ◽  
Bank Supervision ◽  
European Banking Union ◽  
European Banking ◽  
The Uk

This chapter discusses banking supervision in practice. It focuses on two jurisdictions: the UK and the European Banking Union (EBU), and considers in particular the type of powers enjoyed by the UK and EBU regulators, and the way they exercise them in their supervisory approaches. In the process the chapter highlights loopholes in the respective regimes and to some extent evaluates their effectiveness. On 1 April 2013 the Financial Services Act 2012 came into force, removing the Financial Services Authority and delivering a new regulatory structure for the UK, which comprises the Prudential Regulation Authority responsible for microprudential regulation and supervision of banks, building societies, and investment firms; and the Financial Conduct Authority, in addition to a financial stability (macroprudential) body within the Bank of England, the Financial Policy Committee. The EBU brought about the centralization of bank supervision and resolution within the Eurozone. The trigger for the establishment of the EBU was the Eurozone debt crisis.

4 European Banking Union

2015 ◽  
Author(s):  
Kleftouri Nikoletta
Keyword(s):  
Euro Area ◽  
Deposit Insurance ◽  
Spillover Effects ◽  
Banking Union ◽  
Bank Supervision ◽  
European Banking Union ◽  
Cross Border ◽  
European Bank ◽  
Bank Resolution ◽  
European Banking

Having a multiplicity of financial regulators, supervisors, and resolution authorities in Europe can weaken supervision, heighten legal uncertainty, and impede effective resolution. European officials recently agreed that further steps are needed to tackle the specific risks in particular within the euro area, where pooled monetary responsibilities had increased the possibility of cross-border spillover effects in the event of bank crises. As a result, they created a union aimed to centralize bank supervision, deposit insurance, and bank resolution. This chapter sets out two components of the European banking union: single supervision, and single deposit insurance. Single resolution is separately discussed in Chapter 8, where international and European bank resolution frameworks are examined. The chapter concludes that deeper reforms are needed, in conjunction with effective cooperation arrangements.

Sign in / Sign up

Export Citation Format

Share Document