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Empowering the ECB to Supervise Banks: A Choice-Based Approach

Author

Listed:
  • Hertig Gerard

    (*ETH Zürich and ECGI.)

  • Lee Ruben

    (**Oxford Finance Group.)

  • McCahery Joseph A.

    (***University of Amsterdam, Tilburg University and ECGI.)

Abstract

The reform of bank supervision represents a significant institutional challenge for the European Union. This paper explores the merits of a choice-oriented approach under which individual Member states have the option to delegate prudential supervision of their largest banks to the European Central Bank, while retaining the right to re-assume such a role at a later date. Responsibilities, commitments and costs would be allocated by means of a binding arrangement with the ECB that can be tailored to Member states' specific circumstances. The proposal offered here is superior to both existing supervisory arrangements and proposed alternatives. Its adoption would also significantly reinforce the new, post financial crisis EU supervisory architecture.

Suggested Citation

  • Hertig Gerard & Lee Ruben & McCahery Joseph A., 2010. "Empowering the ECB to Supervise Banks: A Choice-Based Approach," European Company and Financial Law Review, De Gruyter, vol. 7(2), pages 171-215, January.
  • Handle: RePEc:bpj:eucflr:v:7:y:2010:i:2:p:171-215:n:2
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    References listed on IDEAS

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    Cited by:

    1. Tröger, Tobias, 2013. "The Single Supervisory Mechanism - Panacea or Quack Banking Regulation? Preliminary assessment of the evolving regime for the prudential supervision of banks with ECB involvement," IMFS Working Paper Series 73, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    2. Beck, T.H.L. & Todorov, R.I. & Wagner, W.B., 2012. "Supervising Cross-Border Banks : Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033)," Other publications TiSEM dfd16cc4-fe7a-4c89-997f-6, Tilburg University, School of Economics and Management.
    3. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund," CEPS Papers 6918, Centre for European Policy Studies.
    4. 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.
    5. Neyer, Ulrike & Vieten, Thomas, 2013. "Die neue europäische Bankenaufsicht: Eine kritische Würdigung," DICE Ordnungspolitische Perspektiven 45, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    6. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund - An Update," CEPS Papers 7276, Centre for European Policy Studies.

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