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EU framework for safeguarding financial stability: Towards an analytical benchmark for assessing its effectiveness

Author

Listed:
  • María J. Nieto

    () (Banco de España)

  • Garry J. Schinasi

    () (International Monetary Fund)

Abstract

European finance is becoming increasingly cross-border, while the European architecture for safeguarding financial stability —including decision-making processes for providing financial-stability public goods— have remained decentralized with some explicit mechanisms for coordination across countries. Policy makers are aware of the limitations of the existing institutional setting, but opinions on how to proceed, including on burden sharing, are lining up along national and regional political lines with less attention paid to European needs. This paper applies the ‘economics of alliances’ to examine these European policy challenges. The paper establishes benchmarks for assessing the ability of Europe’s existing institutional architecture to efficiently allocate resources to safeguard the EU financial system against systemic threats to stability, such as the insolvency of a pan European bank.

Suggested Citation

  • María J. Nieto & Garry J. Schinasi, 2008. "EU framework for safeguarding financial stability: Towards an analytical benchmark for assessing its effectiveness," Occasional Papers 0801, Banco de España;Occasional Papers Homepage.
  • Handle: RePEc:bde:opaper:0801
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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/08/Fic/do0801e.pdf
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    Cited by:

    1. Masciandaro, Donato & Nieto, Maria J. & Quintyn, Marc, 2011. "Exploring governance of the new European Banking AuthorityâA case for harmonization?," Journal of Financial Stability, Elsevier, vol. 7(4), pages 204-214, December.
    2. 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.
    3. Dr. Rezarta Shkurti (Perri) & Dr. Brunilda Duraj, 2010. "The Assessment Of The Financial Soundness Of The Banking Sectors In Balkan Countries Using "Early Warning Indicators" - A Comparative Study With Policy Implications," Journal Articles, Center For Economic Analyses, pages 33-48, June.
    4. María J. Nieto & Larry D. Wall, 2017. "Cross-border banking on the two sides of the atlantic: does it have an impact on bank crisis management?," Working Papers 1738, Banco de España;Working Papers Homepage.
    5. Elisabetta Montanaro, 2016. "The process towards centralisation of the European financial supervisory architecture: The case of the Banking Union," PSL Quarterly Review, Economia civile, vol. 69(277), pages 135-172.
    6. Vítor Gaspar & Garry Schinasi, 2010. "Financial Stability and Policy Cooperation," Working Papers o201001, Banco de Portugal, Economics and Research Department.
    7. Lucia Quaglia & Robert Eastwood & Peter Holmes, 2009. "The Financial Turmoil and EU Policy Co-operation in 2008," Journal of Common Market Studies, Wiley Blackwell, vol. 47, pages 63-87, September.
    8. repec:pal:jbkreg:v:19:y:2018:i:1:d:10.1057_s41261-017-0056-x is not listed on IDEAS
    9. Nieto, Maria J. & Wall, Larry D., 2015. "Cross-border banking on the two sides of the Atlantic: does it have an impact on bank crisis management?," FRB Atlanta Working Paper 2015-11, Federal Reserve Bank of Atlanta.
    10. Gillian G.H. Garcia & Rosa M. Lastra & María J. Nieto, 2009. "Bankruptcy and reorganization procedures for cross-border banks in the EU: Towards an integrated approach to the reform of the EU safety net," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 17(3), pages 240-276, July.
    11. Iman van Lelyveld & Marco Spaltro, 2011. "Coordinating Bank Failure Costs and Financial Stability," DNB Working Papers 306, Netherlands Central Bank, Research Department.
    12. International Monetary Fund, 2008. "Cross-Border Coordination of Prudential Supervision and Deposit Guarantees," IMF Working Papers 08/283, International Monetary Fund.
    13. Gillian G.H.Garcia & Rosa M. Lastra & Maria J. Nieto, 2009. "Bankruptcy and reorganisation procedures for cross-border banks in the EU: Towards an integrated approach to the reform of the EU safety net," FMG Special Papers sp186, Financial Markets Group.
    14. Nedelchev, Miroslav, 2015. "Coordination of banking regulation in the EU," MPRA Paper 66073, University Library of Munich, Germany, revised 2015.
    15. Grégory Nguyen, 2008. "Burden-sharing agreements : the cart before the horse ?," Financial Stability Review, National Bank of Belgium, vol. 6(1), pages 119-132, June.
    16. International Monetary Fund, 2009. "A European Mandate for Financial Sector Supervisors in the EU," IMF Working Papers 09/5, International Monetary Fund.

    More about this item

    Keywords

    Safeguarding EU financial stability; crisis resolution; burden sharing;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • F3 - International Economics - - International Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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