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

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  • Vollmer Uwe

    (Economics Department, Institute for Theoretical Economics, University of Leipzig, Leipzig, Germany)

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.

Suggested Citation

  • Vollmer Uwe, 2016. "The Asymmetric Implementation of the European Banking Union (EBU): Consequences for Financial Stability," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 50(1), pages 7-26, June.
    • Handle: RePEc:vrs:ijomae:v:50:y:2016:i:1:p:7-26:n:2
    DOI: 10.1515/ijme-2016-0009
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    More about this item

    Keywords

    multinational banking; capital requirements; bank resolution; regulatory arbitrage;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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