The fiscal implications of a banking union
AbstractSystemic banking crises are a threat to all countries whatever their development level. They can entail major fiscal costs that can undermine the sustainability of public finances. More than anywhere else, however, a number of euro-area countries have been affected by a lethal negative feedback loop between banking and sovereign risk, followed by disintegration of the financial system, real economic fragmentation and the exposure of the European Central Bank. Recognising the systemic dimension of the problem, the Euro-Area Summit of June 2012 called for the creation of a banking union with common supervision and the possibility for the European Stability Mechanism to recapitalise banks directly. The findings of this paper were presented at the Informal ECOFIN in Nicosia on 14 September 2012.
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Bibliographic InfoPaper provided by Bruegel in its series Policy Briefs with number 748.
Date of creation: Sep 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-22 (All new papers)
- NEP-BAN-2012-09-22 (Banking)
- NEP-CBA-2012-09-22 (Central Banking)
- NEP-EEC-2012-09-22 (European Economics)
- NEP-MON-2012-09-22 (Monetary Economics)
- NEP-OPM-2012-09-22 (Open Economy Macroeconomic)
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- Zsolt Darvas & Guntram B. Wolff, 2013.
"Should Non-Euro Area Countries Join the Single Supervisory Mechanism?,"
DANUBE: Law and Economics Review,
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- Zsolt Darvas & Guntram B. Wolff, 2013. "Should Non-Euro Area Countries Join the Single Supervisory Mechanism?," IEHAS Discussion Papers 1323, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- Gros, Daniel, 2013. "Principles of a Two-Tier European Deposit (Re-)Insurance System," CEPS Papers 7958, Centre for European Policy Studies.
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