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The Case for a European Banking Charter

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  • Martin Cihák
  • Jörg Decressin
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    Abstract

    Most financial institutions in the European Union (EU) are still based in one country, but a number of large financial institutions (LCFI) have systemic cross-border exposures. The paper explains how, despite much progress, nationally-segmented supervisory frameworks and national accountability for financial stability hinder optimization across borders of banks'' operations and efficient and effective LCFI supervision. A full-fledged EU-level prudential regime that operates along-side national regimes--a European Banking Charter (EBC)--could harness market forces to establish a level playing field for financial sector competition, while plugging some significant gaps in Europe''s financial stability framework without concentrating excessive powers.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/173.

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    Length: 34
    Date of creation: 01 Jul 2007
    Date of revision:
    Handle: RePEc:imf:imfwpa:07/173

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    Keywords: European Union; Financial stability; banking; deposit insurance; financial institutions; level playing field; financial services; bank insolvency; financial sector; bank insolvencies; financial market; financial markets; financial system; banking supervision; financial conglomerates; banking system; banking assets; state bank; bank insolvency regime; banking crisis; bankers; banking regulation; bank for international settlements; segmentation; bank failures; bank charter; bankers association; banking structures; federal deposit insurance; moral hazard; banking business; stock prices; banking industry; prudential regulation; deposit insurance scheme; bank supervisors; derivatives markets; bank charters; bond markets; eurobond; bank supervision; equity investment; discount rates; international financial markets; financial innovation; eurobond market; bank supervisor; bank structure; bond; banking crises; bank size; banking market; bonds; bank examiners; bank operation; bank failure; consolidated supervision; corporate bond markets; systemic banking crises; bank activity; corporate bond; national bank; financial economics; banking systems; banking crisis management; banking operation; capital adequacy; bank regulators; bank insolvency regimes; banking supervisors; bank schemes; bank subsidiary; banker; financial instruments; financial systems; liquid markets; bank performance; bank crisis; financial regulation; interbank market;

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    Cited by:
    1. Beck, Thorsten, 2010. "Regulatory Reform After the Crisis: Opportunities and Pitfalls," CEPR Discussion Papers 7733, C.E.P.R. Discussion Papers.
    2. Kenneth Sullivan, 2008. "Presentación proactiva del desempeño," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 130-135, Julio-sep.
    3. Beck, T.H.L. & Todorov, R.I. & Wagner, W.B., 2012. "Supervising Cross-Border Banks: Theory, Evidence and Policy (Revised version of CentER Discussion Paper 2011-127)," Discussion Paper 2012-059, Tilburg University, Center for Economic Research.
    4. Uhde, André & Heimeshoff, Ulrich, 2009. "Consolidation in banking and financial stability in Europe: Empirical evidence," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1299-1311, July.
    5. Banco Central Europeo, 2008. "La titulización en la zona del euro," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 136-149, Julio-sep.
    6. Eisenbeis, Robert A. & Kaufman, George G., 2008. "Cross-border banking and financial stability in the EU," Journal of Financial Stability, Elsevier, vol. 4(3), pages 168-204, September.
    7. Nicolas Véron, 2008. "Europe’s Banking Challenge: Reregulation without Refragmentation," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 9(4), pages 51-59, December.
    8. Martin Cihák & Wim Fonteyne, 2009. "Five Years After," IMF Working Papers 09/68, International Monetary Fund.
    9. Tigran Poghosyan & Martin Cihák, 2009. "Distress in European Banks," IMF Working Papers 09/9, International Monetary Fund.
    10. Helge Berger & Carsten Hefeker, 2008. "Does financial integration make banks more vulnerable? Regulation, foreign owned banks, and the lender-of-last resort," International Economics and Economic Policy, Springer, vol. 4(4), pages 371-393, February.

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