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The fiscal implications of a banking union

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  • Jean Pisani-Ferry
  • Guntram B. Wolff

Abstract

Systemic banking crises are a threat to all countries whatever their development level. They can entail major fiscal costs that can undermine the sustainability of public finances. More than anywhere else, however, a number of euro-area countries have been affected by a lethal negative feedback loop between banking and sovereign risk, followed by disintegration of the financial system, real economic fragmentation and the exposure of the European Central Bank. Recognising the systemic dimension of the problem, the Euro-Area Summit of June 2012 called for the creation of a banking union with common supervision and the possibility for the European Stability Mechanism to recapitalise banks directly. The findings of this paper were presented at the Informal ECOFIN in Nicosia on 14 September 2012.

Suggested Citation

  • Jean Pisani-Ferry & Guntram B. Wolff, 2012. "The fiscal implications of a banking union," Policy Briefs 748, Bruegel.
  • Handle: RePEc:bre:polbrf:748
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    Cited by:

    1. Zsolt Darvas & Guntram B. Wolff, 2013. "Should Non-Euro Area Countries Join the Single Supervisory Mechanism?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 2, pages 141-163, June.
    2. Mongelli, Francesco Paolo, 2013. "The mutating euro area crisis: is the balance between "sceptics" and "advocates" shifting?," Occasional Paper Series 144, European Central Bank.
    3. Nicolas Véron & Guntram B. Wolff, 2013. "From supervision to resolution: next steps on the road to European banking union," Policy Contributions 771, Bruegel.
    4. Marius Andrei Zoican & Lucyna Anna Gornicka, 2014. "Banking Union Optimal Design under Moral Hazard," 2014 Papers pzo33, Job Market Papers.
    5. David Howarth & Lucia Quaglia, 2013. "Banking Union as Holy Grail: Rebuilding the Single Market in Financial Services, Stabilizing Europe's Banks and ‘Completing’ Economic and Monetary Union," Journal of Common Market Studies, Wiley Blackwell, vol. 51, pages 103-123, September.
    6. Thirion, Gilles, 2017. "European Fiscal Union: Economic rationale and design challenges," CEPS Papers 12160, Centre for European Policy Studies.
    7. Maylis Avaro & Henri Sterdyniak, 2014. "Banking union: a solution to the euro zone crisis?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 193-241.
    8. Jean Pisani-Ferry, 2012. "The known unknowns and the unknown unknowns of the EMU," Policy Contributions 756, Bruegel.
    9. Pisani-Ferry, Jean, 2013. "The known unknowns and unknown unknowns of European Monetary Union," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 6-14.
    10. Theo Kiriazidis, 2016. "National State Aid within the Banking Union (BU) and the Hard Core: Periphery Financial Divide," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(5), pages 1-4.
    11. Górnicka, Lucyna A. & Zoican, Marius A., 2016. "Too-international-to-fail? Supranational bank resolution and market discipline," Journal of Banking & Finance, Elsevier, vol. 65(C), pages 41-58.
    12. Iain Begg, 2012. "Banking Union: Inevitable, But Profoundly Challenging?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(4), pages 15-20, December.
    13. Daniel Gros, 2012. "Principles of a Two-Tier European Deposit (Re-)Insurance System," Credit and Capital Markets, Credit and Capital Markets, vol. 45(4), pages 489-499.
    14. Zsolt Darvas, 2012. "The euro crisis: ten roots, but fewer solutions," Policy Contributions 755, Bruegel.
    15. Claudia Lambert, 2015. "Die Debatte um die Einlagensicherung: Hintergründe und Perspektiven," DIW Roundup: Politik im Fokus 56, DIW Berlin, German Institute for Economic Research.
    16. Belke, Ansgar & Gros, Daniel, 2015. "Banking Union as a Shock Absorber," Ruhr Economic Papers 548, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    17. Schilirò, Daniele, 2016. "Rules, Imbalances and Growth in the Eurozone," MPRA Paper 75641, University Library of Munich, Germany.
    18. Agnieszka Trzcinska, 2015. "The Impact of the New Resolution Regime on Public Support to Banks (Udzial sektora publicznego w kosztach ratowania bankow w swietle nowych przepisow w zakresie restrukturyzacji i uporzadkowanej likwi," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 13(55), pages 120-133.

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