Cross-border resolution of failed banks in the EU: A search for the second-best policies
AbstractThis paper analyzes the reasons for the failure of the multilateral resolution of EU cross-border banks such as Fortis. We argue that the pre-crisis regime based on soft law and voluntary coordination was unable to align the incentives of national authorities acting under the time pressure and uncertainty of a banking crisis. We ask whether this experience induced the Commission to propose reforms that would close the regulatory gap between integrated cross-border banks and national resolution regimes. Although, the Commission proposals submitted within a year of the crisis considered the more radical reform options, such as shifting the regime to the EU level or reorganizing cross-border banks so that they could be resolved on the national level, in the end the Commission supported the traditional reform path of deepening soft law and strengthening pre-crisis governance arrangements. At the same time, the new financing mechanisms introduced to stabilize the Eurozone can pave the way for the introduction of an EU-level bank resolution regime, when the next reform opportunity arises.
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Bibliographic InfoPaper provided by Institute for European integration research (EIF) in its series Working Papers of the Vienna Institute for European integration research (EIF) with number 8.
Date of creation: 15 Nov 2010
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Web page: http://www.eif.oeaw.ac.at
political science; European Commission;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-19 (All new papers)
- NEP-BAN-2011-02-19 (Banking)
- NEP-CIS-2011-02-19 (Confederation of Independent States)
- NEP-EEC-2011-02-19 (European Economics)
- NEP-EUR-2011-02-19 (Microeconomic European Issues)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean Pisani-Ferry & André Sapir, 2010. "Banking crisis management in the EU: an early assessment," Economic Policy, CEPR & CES & MSH, vol. 25, pages 341-373, 04.
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