scholarly journals The missing European Deposit Insurance Scheme

2020 ◽  
pp. 151
Author(s):  
Pery Bazoti
Keyword(s):  
Euro Area ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
The European Union ◽  
Risk Minimization ◽  
Insurance Scheme ◽  
European Banking Union ◽  
European Banking

The European Banking Union embarked as a highly ambitious project of the European Union as a response to the signifi cant fl aws and weaknesses in the original architecture of the European Monetary Union that became apparent during the economic crisis. However, the establishment of a single European banking system has stumbled upon the creation of a common deposit insurance scheme that could safeguard depositors and create a more stable fi nancial framework in the euro area. The European Deposit Insurance Scheme (EDIS) was fi rstly introduced by the European Commission in 2015. As a bold proposal that comprises wide risk mutualization among the euro area member states, it has spurred a vivid discussion in the European public speech and many proposals have been made since then altering its original planning in an effort to tackle the moral hazard concerns that have risen. The present article, after discussing the reasons that keep obstructing EDIS, presents these suggestions that move around, primarily, the role of the national deposit guarantee schemes. However, as highlighted in the article, before moving to any alterations on the structure and role of a proposed common deposit insurance scheme, signifi cant risk minimization on behalf of the national banking systems, must precede by limiting the sovereign exposures of banks and the size of the Non-Performing Loans. Such steps of risk minimization are critical for addressing concerns and the political unwillingness demonstrated by several European countries in moving forward towards deeper integration.

The opportunity for euro-area reform is closing

2019 ◽  
Keyword(s):  
Euro Area ◽  
Deposit Insurance ◽  
Insurance Coverage ◽  
Burden Sharing ◽  
Banking Union ◽  
Governance Reform ◽  
Content Type ◽  
European Banking Union ◽  
European Banking ◽  
The Eu

Subject Euro-area governance. Significance In the EU, macroeconomic governance reform is focusing around the creation of a euro-area budget and a European Deposit Insurance Scheme (EDIS) -- the final pillar for the completion of the European Banking Union (EBU) which would provide stronger insurance coverage for member states. However, northern countries are reluctant to pay for crisis-prone ones in the south, so compromise on detail could take years while the initiatives will have limited scope in responding to crises. Impacts The ECB’s Single Supervisory Mechanism will continue to focus on ‘risk reduction’ measures, including the disposal of non-performing loans. The EU is unlikely to give Italian budget concessions perceived as acceptable by Rome, possibly hardening the position of Italy’s populists. If Manfred Weber’s candidacy to become European Commission president fails, Berlin will likely insist that it gets the ECB president post. The rise of migration flows in the Mediterranean and the lack of EU resolution on burden-sharing will worsen north-south relations.

scholarly journals European Banking Union – an institutional analysis

2020 ◽  
Vol 5 (1) ◽  
pp. 59-75
Author(s):  
Barbara Majewska-Jurczyk
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
Insurance Scheme ◽  
European Central ◽  
European Banking ◽  
The Creation

Aim: The Banking Union is an important step towards a genuine Economic and Monetary Union. The strengthening of the European banking system has become a topic of debate since the 2008 crisis when it became clear that stability and security of the system security may require increased supervision over operations conducted. The Banking Union was created to avoid the situation that taxpayers are first in line to pay for bailing out ailing banks. The Banking Union consists of three pillars: 1) the Single Supervisory Mechanism (SSM), which centralizes supervision of European banks around the European Central Bank, 2) the Single Resolution Mechanism (SRM), which the main purpose is to ensure the efficient resolution for recapitalization failing banks, and 3) the European Deposit Insurance Scheme (EDIS), which is still unfinished. The creation of the Banking Union is accompanied by a remarkable transfer of sovereignty to the European level. This article aims to provide an overview of the changes unfolding across the Banking Union from a law and economics perspective and to explain the role of the European Central Bank in supervision over the banking system, which is different from the policy of controlling prices through determining the level of interest rates and keeping inflation under control.   Design/Research methods: The analysis of the functioning Banking Union is based on the review of literature and analysis of reports and legal acts.   Findings: The Banking Union supports financial integration in the EU by implementing a common set of rules and a common supervisory and resolution mechanism. The creation of the Deposit Insurance Scheme is likely to contribute to the protection of banks and consumers in case of a potential future crisis. The author argues that the European Central Bank as a supervisor of the financial market should create a second supervisory body, which would significantly strengthen the system and allow the ECB more efficiently fulfill its task as chief supervisor.

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.

scholarly journals Scrutiny or Complacency? Banking Union in the Bundestag and the Assemblée Nationale

2021 ◽  
Vol 9 (2) ◽  
pp. 219-229
Author(s):  
Anna-Lena Högenauer
Keyword(s):  
Deposit Insurance ◽  
Banking Union ◽  
Insurance Scheme ◽  
German Government ◽  
European Banking Union ◽  
Single Resolution Mechanism ◽  
Assemblée Nationale ◽  
Material Interests ◽  
European Banking ◽  
German Bundestag

The financial and eurozone crises highlighted the inadequacy of the original governance structures of the eurozone. In response, a range of reforms were launched, including the creation of a European banking union. In practice, some elements of the banking union were delayed by division among member states and the breakdown of the Franco-German motor, such as the question of the operationalization of the single resolution mechanism and fund or the deposit insurance scheme. In addition, eurozone governance—which would once have been regarded as a technocratic issue—became increasingly politicized. The aim of this article is to study the extent to which the banking union was scrutinized by parliament and to what degree this reflects material interests and ideas. For this purpose, it focuses on salience (i.e., how much attention the issue received) and polarization (i.e., the divergence of positions). The analysis of the resolutions and debates of the German Bundestag and French Assemblée Nationale, i.e., the parliaments of two key states in EU decision-making on banking union, finds that the German government was indeed closely scrutinized, whereas the French government was relatively unconstrained.

scholarly journals Multilevel cooperation in the EU resolution of cross-border bank groups: lessons from the non-euro area Member States joining the Single Resolution Mechanism (SRM)

2021 ◽  
Author(s):  
Agnieszka Smoleńska
Keyword(s):  
Euro Area ◽  
Banking Union ◽  
Member States ◽  
Essential Condition ◽  
European Banking Union ◽  
Cross Border ◽  
Single Resolution Mechanism ◽  
European Banking ◽  
Administrative Oversight ◽  
The Eu

AbstractCross-border banking presents a unique set of challenges in the EU from the perspective of arranging administrative oversight structures. Structuring cooperation between different EU and national authorities in a way which is conducive to trust-building and mutual engagement is an essential condition for overcoming disintegrative tendencies in the internal market. To assess how the existing EU arrangements fare in this regard in the context of EU resolution law, this article comparatively analyses the different models of multilevel administrative cooperation in the post-crisis EU framework. These are specifically the centralised model of the European Banking Union (Single Resolution Mechanism) and the relatively looser networked model of the resolution colleges. The multilevel cooperation under both models is nuanced given the distinct roles of the national resolution authorities, EU agencies and the differentiated status of non-euro area Member States in the EBU (Croatia, Bulgaria). The article’s findings allow to identify specific problems of constitutional nature pertaining to the accountability of administrative cooperation, equality of Member States and the implications of Meroni doctrine’s distortive effects.

scholarly journals COVID-19, the European Health Union and the CJEU: Lessons from the Case Law on the Banking Union

2020 ◽  
Vol 11 (4) ◽  
pp. 781-789
Author(s):  
Oliver BARTLETT
Keyword(s):  
European Union ◽  
Case Law ◽  
Legal Issues ◽  
Banking Union ◽  
The European Union ◽  
Health Issues ◽  
European Banking Union ◽  
European Banking ◽  
European Health ◽  
Health Field

This contribution will draw on the literature that has accumulated on how the Court of Justice of the European Union (CJEU) has responded to the European Banking Union, which was established in similar crisis circumstances that now face the European Union (EU) in the age of COVID-19, to illustrate the legal issues on which the CJEU’s input will be particularly important in the shaping of any future European Health Union. This contribution will highlight three legal issues in particular: the interpretation of EU Treaty provisions in the health field; the scope of EU competence; and the powers of EU institutions and agencies. This contribution will argue that the CJEU case law to date on health issues is encouraging with respect to competence and agencies, but more cautious with respect to the Treaty’s health provisions.

EWU-Krisenmanagement: Warum die Politik auf dem richtigen Weg ist

2012 ◽  
Vol 63 (3) ◽  
Author(s):  
Werner Becker ◽  
Horst Löchel
Keyword(s):  
Crisis Management ◽  
Euro Area ◽  
Ad Hoc ◽  
Banking Union ◽  
Current Crisis ◽  
European Banking Union ◽  
Short Run ◽  
European Banking ◽  
Great Persistence ◽  
The Right

SummaryWith troubles in the European Monetary Union (EMU) showing great persistence, the emergency measures and ad-hoc crisis management of European authorities has been subject to harsh criticism. The current fierce debate among economists and the broad public has given rise to two camps advocating fundamentally different approaches how to exit the sustained crisis. While according to the Integrationists′ view, the only viable way to get rid of pressing debt problems and to restore confidence in the Euro area lies in a common guarantee for national debt obligations, so-called Minimalists advocate a strict return to the cornerstones of the Maastricht Treaty, in particular strict compliance with the debt and deficit limits laid out by the Treaty as well as a credible application of the ‚no-bail-out‘ rule. However, in their pure form, both strategies do not serve for a timely and effective crisis management as they either require a level of supranational integration that - given the still prevalent Westphalian order - cannot be attained in the short run nor is it on the agenda of European policy, or essentially deny the significant flaws within the EMU architecture that failed to prevent current fiscal woes.The current crisis management of European authorities has followed neither of the two extremes but has taken a viable middle-of-the-road approach that resulted in useful and necessary repairs to the institutional architecture of the Euro area, most notably the establishment of the commonly guaranteed stability mechanisms EFSF and ESM as well as the first steps taken towards a European banking union. Hence, in contrast to most observers, we argue that the European authorities, by operating a prudent stepby- step approach, are on the right track towards solving the current crisis. As a result, European Central Bank could move back to its original approach of monetary policy.

Conclusion

2017 ◽  
Author(s):  
Rachel A. Epstein
Keyword(s):  
Economic Policy ◽  
Global Economy ◽  
Banking Sector ◽  
Banking Union ◽  
Major Powers ◽  
European Banking Union ◽  
Catching Up ◽  
European Banking ◽  
Domestic Banks

The study’s findings from Europe have implications for other major powers, including that: (1) banking sector protectionism became increasingly costly given other liberalizing trends; (2) foreign-owned bank subsidiaries can provide more stable funding in crises than alternative foreign or even domestic bank activity; (3) foreign domination in finance limited catching up in the global economy, but in fact few states showed the capacity to exploit domestic banks for national goals; and (4) centralized bank governance through European Banking Union weakened bank–state ties in Europe, and elevated the role of markets there. This chapter analyzes the relevance of the findings for the BRICS (Brazil, Russia, India, China, and South Africa). China is perhaps the clearest case of a country struggling to both liberalize and retain the economic policy autonomy associated with a largely state-controlled financial system. The conclusion specifies the broader transformation in bank–state ties, but also its limits.

Justice system and corruption dog Bulgaria’s euro bid

2019 ◽  
Keyword(s):  
Banking System ◽  
Political Support ◽  
Banking Union ◽  
Waiting Room ◽  
Content Type ◽  
Eu Member States ◽  
European Banking Union ◽  
Finance Minister ◽  
European Banking ◽  
The Stability

Significance Bulgaria must also join the European Banking Union (EBU) as part of its Exchange Rate Mechanism (ERM) II bid, in order to alleviate concerns over institutional governance, economic convergence and the stability of its banking system. ERM II accession -- the ‘waiting room to the euro’ -- would bolster Bulgaria’s financial and monetary stability, and help serve as a policy anchor; Bulgaria had hoped to join this month, but Finance Minister Vladislav Goranov said in June he now hoped for entry by year-end if not before. Impacts Timing will depend on Bulgaria’s meeting the new requirement to join both ERM II and the EBU at the same time. Political support from other euro-area states could also affect the ultimate timeline. That Croatia has just applied for ERM II shows adopting the euro is still a goal, particularly for smaller EU member states.

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