Towards Harmonised Frameworks for the Liquidation of Non-Systemically Relevant Credit Institutions in the EU?

2021 ◽  
Vol 18 (4) ◽  
pp. 555-587
Author(s):  
Jens-Hinrich Binder
Keyword(s):  
Deposit Insurance ◽  
Banking Union ◽  
Bank Failures ◽  
Functional Requirements ◽  
International Debate ◽  
Single Resolution Mechanism ◽  
Full Harmonisation ◽  
European Crisis ◽  
The Status ◽  
The Eu

Abstract As part of its ongoing consultation on the European crisis management and deposit insurance framework currently available for the management of bank failures within the EU generally and the Banking Union in particular, the European Commission has called for the respondents’ views as to the need for further harmonisation of resolution arrangements for banks that currently do not qualify for resolution under the auspices of the Single Resolution Mechanism. In this respect, the consultation takes up a broader discussion on the need for harmonised bank insolvency regimes within the EU, which also ties in with an earlier international debate on the functional characteristics of optimal bank insolvency regimes initiated by international standard setters in the early 2000s. Against this backdrop, the paper analyses the case for further reform, and identifies potential impediments (both technical and political) to be expected in this regard. It argues that, while a full harmonisation of resolution powers and the centralisation of decision-making powers can be expected to address relevant concerns regarding the status quo, a comprehensive harmonisation can also be expected to meet with substantial political opposition, which in turn requires a better understanding of the functional requirements to be met by less ambitious reforms.

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.

15 The Operation of the Single Resolution Mechanism in the Context of the EU State Aid Regime

2016 ◽  
Author(s):  
Kokkoris Ioannis ◽  
Olivares-Caminal Rodrigo
Keyword(s):  
Crisis Management ◽  
Financial Stability ◽  
Banking Sector ◽  
Critical Appraisal ◽  
State Aid ◽  
Management Tool ◽  
Banking Union ◽  
The European Union ◽  
Single Resolution Mechanism ◽  
The Eu

This chapter addresses the initiatives of the European Commission to maintain the financial stability of the banking sector. It analyses the regulatory reforms on bank recovery and resolution introduced by the EU aimed at creating a Banking Union, and provides an overview of the Bank Recovery and Resolution Directive (BRRD) by taking into account the crisis management tool innovations. It also offers a critical appraisal of the Single Resolution Mechanism (SRM). The initiatives examined here are envisaged in a two-pronged approach: through the uniform rules of the Banking Union and in a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism (SRM) and a Single Resolution Fund (SRF) on one hand, and its interrelation with the state aid rules of the Treaty for the Functioning of the European Union (TFEU) on the other.

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 Deposit insurance systems in the European union: legal regulation and development prospects

2019 ◽  
pp. 156-162
Author(s):  
N. M. Alsov
Keyword(s):  
European Union ◽  
Financial Stability ◽  
Deposit Insurance ◽  
Banking Sector ◽  
Legal Regulation ◽  
Banking Union ◽  
The European Union ◽  
Insurance Policy ◽  
The Third ◽  
The Eu

The paper provides a historical, substantive and functional analysis of the legal regulation of deposit insurance systems (hereinafter referred to as DIS) in the European Union based on Directive 2014/49 / EC of the European Parliament and of the Council of April 16, 2014. “On Deposit Insurance Systems” (revised). The author considers the contribution of DIS to improving the financial stability of the EU banking sector. The paper shows a conducted assessment of the measures implemented and planned for implementation initiated by the European Commission and the European Central Bank for the implementation of a single European DIS as the third pillar of the Banking Union. The author concludes that the third Directive “On DIS” allows for a qualitative step forward towards the creation of the third pillar of the Banking Union. Despite some unresolved and controversial issues, it creates uniform rules of the game for national DIS in a deposit insurance policy. Further development and movement towards European DIS will make it possible to increase the effectiveness of the EU deposit insurance policy by reducing costs, overcoming administrative barriers in national DISs, increase the level of protection of depositors’ rights, and strengthen confidence in the banking sector and its stability.

scholarly journals Unia bankowa a stabilność systemu finansowego UE

2017 ◽  
pp. 75-88
Author(s):  
Małgorzata Mikita
Keyword(s):  
European Union ◽  
Financial Market ◽  
Financial System ◽  
Banking Union ◽  
The European Union ◽  
Single Supervisory Mechanism ◽  
Single Resolution Mechanism ◽  
The Stability ◽  
The Impact ◽  
The Eu

Banking union is a new concept of the European Union in the field of financial market. The project aim is to strengthen the financial system and increase its resistance to crises that may arise in the future. This article aims to analyse the impact of the banking union on the stability of the financial system in the EU. Three pillars of the banking union are taken into account: single supervisory mechanism, single resolution mechanism and single deposit guarantee scheme. The author argues that the banking union can contribute to the stability of the financial system in the EU, but it cannot guarantee it

The European deposit insurance game plan

2019 ◽  
Vol 11 (1) ◽  
pp. 2-20
Author(s):  
Theo Kiriazidis
Keyword(s):  
Financial Stability ◽  
Deposit Insurance ◽  
Banking Union ◽  
Discretionary Power ◽  
Content Type ◽  
Financial Framework ◽  
Seeking Behavior ◽  
Game Plan ◽  
Practical Implications ◽  
The Eu

Purpose This paper aims to analyze the development of European Deposit Insurance (DI) and assess the recent development at the EU level to establish a European Deposit Insurance Scheme (EDIS) in the context of a more integrated financial framework: the Banking Union (BU). Design/methodology/approach The author uses literature review and empirical evidence to analyze the dynamic interaction among European governments in an effort to attract aggressive deposits with severe repercussion for financial stability. Findings The paper argues that a liquidity providing EDIS would render regulatory subsidy and rent-seeking behavior persisting by allowing national policies to be pursued with considerable discretionary power and in the context of increasing competition for deposits. This would run contrary to the BU objectives and constitute a major failure of the program. Practical implications The findings of the study can be helpful in understanding the DI policies pursued by European governments and their implications. Originality/value To the best of the authors’ knowledge, this is the first study that examines the interactions among European governments in pursuing DI policies and assesses the implications of EDIS.

scholarly journals European Deposit Insurance Scheme(s) – Consequences for the EU’s Financial Stability

2021 ◽  
Vol 24 (4) ◽  
pp. 123-136
Author(s):  
Klaudia Zielińska-Lont
Keyword(s):  
Financial Stability ◽  
Deposit Insurance ◽  
Banking Union ◽  
The European Union ◽  
Target Level ◽  
Insurance Scheme ◽  
National Implementation ◽  
Deposit Guarantee Schemes ◽  
Limited Scope ◽  
The Eu

The aim of this paper is to evaluate the potential consequences that the shortcomings in harmonising the national deposit guarantee schemes may have on the financial stability of the European Union. The relevance of this subject is underlined both by the European Commission’s intention to revive the European Deposit Insurance Scheme project in 2021 and the recent signals from Germany that they are willing to support the initiative. The paper presents a review of the discussions on establishing a European Deposit Insurance Scheme, the reasons for the project’s failure and the consensus solution that took the form of the Deposit Guarantee Scheme Directive (DGSD). The limited scope of deposit guarantee scheme harmonisation under this directive is discussed in the context of the related EBA opinions pointing to different areas of potential improvements. Differences in national implementation are also reviewed in terms of their potential impact on financial stability. Apart from a careful literature review, statistical analysis of the available financial information characterizing the largest national deposit schemes of the euro is performed to quantify their progress towards the target level of the available financial means. The results prove that most national schemes are still far from reaching the 0.8% target level of readily available funds and that potentially desirable amendments to the DGSD may drag them even further away from reaching that target by 2024. The author concludes that from the perspective of financial stability, the EU should focus on establishing a single scheme at an international level that would complete the project of establishing a banking union. The results contribute to the ongoing discussion on the need to further integrate the national deposit guarantee schemes inside the EU.

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.

In or Out?

2018 ◽  
Author(s):  
Catherine E. De Vries
Keyword(s):  
Public Opinion ◽  
Status Quo ◽  
Data Sources ◽  
Fine Grained ◽  
Alternative State ◽  
Empirical Measurement ◽  
The Status ◽  
People’S Attitudes ◽  
Over Time ◽  
The Eu

This chapter introduces a benchmark theory of public opinion towards European integration. Rather than relying on generic labels like support or scepticism, the chapter suggests that public opinion towards the EU is both multidimensional and multilevel in nature. People’s attitudes towards Europe are essentially based on a comparison between the benefits of the status quo of membership and those associated with an alternative state, namely one’s country being outside the EU. This comparison is coined the ‘EU differential’. When comparing these benefits, people rely on both their evaluations of the outcomes (policy evaluations) and the system that produces them (regime evaluations). This chapter presents a fine-grained conceptualization of what it means to be an EU supporter or Eurosceptic; it also designs a careful empirical measurement strategy to capture variation, both cross-nationally and over time. The chapter cross-validates these measures against a variety of existing and newly developed data sources.

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