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Italian solution of failing banks and its importance for banking union completion
[Italské řešení selhávajících bank a jeho význam pro dokončení bankovní unie]

Author

Listed:
  • Jan Famfollet
  • Eliška Straková

Abstract

The banking union creates the system for banking supervision and banking crises solution based on single European Union rules. The Bank Recovery and Resolution Directive (BRRD) means an important milestone, the main goal of which is to limit government assistance to failing banks (bailout) and replace it with a bail-in system. The article focuses on Italian banking crises solution and points out that despite the existence of banking union rules, there is legal possibility to circumvent and save banks via the public finances (bailout). On the one hand "Italian solution" confirms that there are strong weaknesses in the current rules of the banking union, on the other hand it can be interpreted as a flexible framework that can be tailored to a specific country. The article explains the reasons for the distinct solution of the banking crisis in the Italian banking sector and evaluates the impact of this solution on the further banking union completion.

Suggested Citation

  • Jan Famfollet & Eliška Straková, 2018. "Italian solution of failing banks and its importance for banking union completion [Italské řešení selhávajících bank a jeho význam pro dokončení bankovní unie]," Současná Evropa, Prague University of Economics and Business, vol. 2018(1), pages 44-56.
    • Handle: RePEc:prg:jnlsev:v:2018:y:2018:i:1:id:154:p:44-56
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    References listed on IDEAS

    as
    1. Andreas Jobst & Miss Anke Weber, 2016. "Profitability and Balance Sheet Repair of Italian Banks," IMF Working Papers 2016/175, International Monetary Fund.
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    More about this item

    Keywords

    Banking union; BRRD; Bail-in; Bailout; Precautionary recapitalisation; Italian banking sector; bankovní unie; bail-in; bailout; preventivní rekapitalizace; italský bankovní sektor;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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