Banking Union : a solution to the euro zone crisis
In June 2012 European Council launched the banking union as a new project expected to contribute to solve the euro area crisis. Is banking union a necessary supplement to monetary union or a new rush forward? A banking union would break the link between the sovereign debt crisis and the banking crisis, by asking the ECB to supervise banks, by establishing common mechanisms to solve banking crises, and by encouraging banks to diversify their activities. The banking union project is based on three pillars: a Single Supervisory Mechanism (SSM), a Single Resolution Mechanism (SRM), a European Deposit Guarantee Scheme (EDGS). Each of these pillars raises specific problems. Some are related to the current crisis (can deposits in euro area countries facing difficulties be guaranteed?); some other issues are related to the EU complexity (should the banking union include all EU member states? Who will decide on banking regulations?), some other issues are related to the EU specificity (is the banking union a step towards more federalism?); the more stringent are related to structural choices regarding the European banking system. Banks'solvency and ability to lend, would depend primarily on their capital ratios, and thus on financial markets' sentiment. The links between the government, firms, households and domestic banks would be cut, which is questionable. Will governments be able tomorrow to intervene to influence bank lending policies, or to settle specific public banks? An opposite strategy could be promoted: restructuring the banking sector, and isolating retail banking from risky activities. Retail banks would focus on lending to domestic agents, and their solvency would be guaranteed by the interdiction to run risky activities on financial markets. Can European peoples leave such strategic choices in the hands of the ECB?
|Date of creation:||Apr 2014|
|Date of revision:|
|Publication status:||Published in Revue de l'OFCE - Débats et politiques, 2014, pp.195-241|
|Contact details of provider:|| Web page: http://www.sciencespo.fr/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Viral V. Acharya & Iftekhar Hasan & Anthony Saunders, 2006.
"Should Banks Be Diversified? Evidence from Individual Bank Loan Portfolios,"
The Journal of Business,
University of Chicago Press, vol. 79(3), pages 1355-1412, May.
- Iftekhar Hasan & Anthony Saunders & Viral V. Acharya, 2002. "Should banks be diversified? Evidence from individual bank loan portfolios," BIS Working Papers 118, Bank for International Settlements.
- Jean Pisani-Ferry & André Sapir & Nicolas Véron & Guntram B. Wolff, 2012. "What kind of European banking union?," Policy Contributions 731, Bruegel.
- Gros, Daniel & Beck, Thorsten, 2012.
"Monetary Policy and Banking Supervision: Coordination instead of separation,"
7528, Centre for European Policy Studies.
- Thorsten Beck & Daniel Gros, 2012. "Monetary Policy and Banking Supervision: Coordination Instead of Separation," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(4), pages 33-39, December.
- Nicolas Véron & Guntram B. Wolff, 2013.
"From supervision to resolution: next steps on the road to European banking union,"
- Nicolas Veron & Guntram B. Wolff, 2013. "From Supervision to Resolution: Next Steps on the Road to European Banking Union," Policy Briefs PB13-5, Peterson Institute for International Economics.
- Douglas W. Diamond & Philip H. Dybvig, 2000.
"Bank runs, deposit insurance, and liquidity,"
Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
- Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund - An Update," CEPS Papers 7276, Centre for European Policy Studies.
- Jean Pisani-Ferry & Guntram B. Wolff, 2012. "The fiscal implications of a banking union," Policy Briefs 748, Bruegel.
- Repullo, R., 1999.
"Who Should Act as Lender of Last Resort? An Incomplete Contracts Model,"
9913, Centro de Estudios Monetarios Y Financieros-.
- Repullo, Rafael, 2000. "Who Should Act as Lender of Last Resort? An Incomplete Contracts Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 580-605, August.
- Rafael Repullo, 2000. "Who should act as lender of last resort? an incomplete contracts model," Proceedings, Federal Reserve Bank of Cleveland, pages 580-610.
- Christophe Morel & Jean-Louis Nakamura, 2000. "Fonctions et tarification d'un fonds de garantie bancaire," Revue Française d'Économie, Programme National Persée, vol. 15(2), pages 77-116.
- Julian T Chow & Jay Surti, 2011. "Making Banks Safer; Can Volcker and Vickers Do it?," IMF Working Papers 11/236, International Monetary Fund.
- Jan Kregel, 2011. "Will restricting proprietary trading and stricter derivatives regulation make the US financial system more stable?," PSL Quarterly Review, Economia civile, vol. 64(258), pages 227-247.
- Zsolt Darvas & Silvia Merler, 2013. "The European Central Bank in the age of banking union," Policy Contributions 796, Bruegel.
- André Sapir & Guntram B. Wolff, 2013. "The neglected side of banking union: reshaping Europe’s financial system," Policy Contributions 792, Bruegel.
- Michel Castel & Olivier Pastré, 2010. "2019 : quel paysage bancaire européen ?," Revue d'Économie Financière, Programme National Persée, vol. 96(1), pages 163-169.
- Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund," CEPS Papers 6918, Centre for European Policy Studies.
- Charles Goodhart, 2000. "The Organisational Structure of Banking Supervision," FMG Special Papers sp127, Financial Markets Group.
When requesting a correction, please mention this item's handle: RePEc:spo:wpmain:info:hdl:2441/144pedpca18ff8v7fh3tvnp99m. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Spire @ Sciences Po Library)
If references are entirely missing, you can add them using this form.