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Blueprint

European banking supervision: the first eighteen months

The Blueprint provides a review of the first 18 months of European banking supervision. It reviews the overall situation and the situation in a number of euro-area countries. It provides important insights into the start of a new policy regime that involves profound change for the European banking landscape

By: and Date: June 8, 2016 Topic: Finance & Financial Regulation

European banking supervision, also known as the Single Supervisory Mechanism, is the first and arguably the main component of European banking union. In late 2014, the European Central Bank became the supervisor for the region’s largest banking groups; the ECB also oversees the supervision by national authorities of smaller banks.

This Blueprint is the first in-depth study of how this ground-breaking reform is working in practice. It includes a euro-area overview and chapters on nine countries covering 95 percent of the area’s banking assets, illustrating the diversity of experiences, situations and perceptions in different member states.

Despite teething troubles and occasional misjudgements, this assessment finds that overall European banking supervision has been effective, demanding and broadly fair, at least for the banks under the ECB’s direct watch. Even so, achieving a truly single market in banking services will require more time, further supervisory initiatives and new Europe-wide regulatory and legislative steps.

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External Publication

European Parliament

The single monetary policy and its decentralised implementation: An assessment

This paper assesses the decentralised implementation of monetary policy by the Eurosystem in terms of its transparency, efficiency and simplicity. Compared to the Fed, the Eurosystem seems to have higher staff numbers and operational costs for similar tasks.

By: Francesco Papadia and Alexander Roth Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: October 4, 2017
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Policy Contribution

A European perspective on overindebtedness

The sequence of crisis and policy responses after mid-2007 was a gradual recognition of the unsustainability of the euro-area policy framework. The bank-sovereign vicious circle was first observed in 2009 and became widely acknowledged in the course of 2011 and early 2012. The most impactful initiative has been the initiation of a banking union in mid-2012, but this remains incomplete and needs strengthening.

By: Nicolas Véron and Jeromin Zettelmeyer Topic: European Macroeconomics & Governance Date: September 28, 2017
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Opinion

A resilient Euro needs Franco-German compromise

In a piece signed by 15 leading French and German economists, Nicolas Véron lays out a path to a more sustainable Euro. Germany will need to accept some form of risk sharing. France will need to allow more market discipline. But the two countries can find a common vision for reforms

By: Agnès Bénassy-Quéré, Markus K. Brunnermeier, Lars Feld, Marcel Fratzscher, Philippe Martin, Hélène Rey, Isabel Schnabel, Nicolas Véron, Beatrice Weder di Mauro, Jeromin Zettelmeyer, Henrik Enderlein, Emmanuel Farhi, Clemens Fuest, Pierre-Olivier Gourinchas and Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: September 27, 2017
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Blog Post

How has banking union changed mergers and acquistions?

The aim of the banking union was to break the toxic link between banks and states. One way of achieving this is by increasing cross border banking through mergers and acquisitions. This blog shows that little has changed in M&A activity since the banking union was launched. In fact, we seem to be witnessing a slight re-nationalisiation of banking consolidation.

By: Inês Goncalves Raposo and Guntram B. Wolff Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: September 13, 2017
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Blog Post

Nordea’s move to the Banking Union is no surprise

Scandinavian banking giant is moving to Finland. This is not just a flight from increasing taxes and tighter regulation in its current home, Sweden. Nordea is also moving inside the banking union to find a fiscal backstop large enough to see it through any future crisis. Will this vote of confidence encourage Sweden and Denmark to join the banking union?

By: Dirk Schoenmaker Topic: Finance & Financial Regulation Date: September 12, 2017
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Opinion

Europe must seize this moment of opportunity

As the EU enjoys a period of growth and relative stability, there is finally room to undertake long-needed reforms. But it is vital to act soon, and priorities must be set. There are three pillars of reform for the coming months: completing a robust euro area; building a coherent EU foreign policy; and harnessing the single market’s potential to deliver strong and inclusive growth.

By: Agnès Bénassy-Quéré, Michael Hüther, Philippe Martin and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: August 12, 2017
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Blog Post

The international effects of ECB’s monetary policy

What’s at stake: the literature on monetary policy spillovers is abundant of studies investigating the impact of the US Federal Reserve’s monetary policy announcements and actions on emerging market economies. More recently, economists have been investigating the effect of the ECB’s credit easing as well.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: July 24, 2017
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Policy Contribution

Precautionary recapitalisation: time for a review?

While precautionary recapitalisation is a legitimate instrument for bank crisis management, the conditions set for it by BRRD (Bank Recovery and Resolution Directive) are restrictive and have so far been effective to prevent its inappropriate use on insolvent banks. Nevertheless, the European Stability Mechanism should be empowered to participate in future precautionary recapitalisations.

By: Nicolas Véron Topic: Finance & Financial Regulation Date: July 13, 2017
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External Publication

European Parliament

Precautionary recapitalisations: time for a review

Precautionary recapitalisation, a tool for public intervention in the banking sector defined in the Bank Recovery and Resolution Directive (BRRD), is a legitimate instrument for bank crisis management. The conditions set for it by BRRD are restrictive and have so far been effective to prevent its inappropriate use on insolvent banks. Outside of the scope of BRRD, the co-legislators should consider a reform of the EU audit framework to improve audit quality, and the European Stability Mechanism should be empowered to participate in future precautionary recapitalisations.

By: Nicolas Véron Topic: European Parliament, Finance & Financial Regulation Date: July 12, 2017
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Policy Contribution

A macro approach to international bank resolution

As regulators rush to strengthen banking supervision and implement bank resolution regimes, a macro approach to resolution is needed that considers both the contagion effects of bail-in and the continuing need for a fiscal backstop to the financial system. This can be facilitated through the completion of a banking union in which the European Stability Mechanism (ESM) becomes the fiscal backstop to the euro-area banking system.

By: Dirk Schoenmaker Topic: Finance & Financial Regulation Date: July 10, 2017
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Past Event

Past Event

Is there a way out of non-performing loans in Europe?

At this event we looked at the issue of non-performing loans in Europe. The event also saw the launch of the latest issue of "European Economy – Banks, Regulation and the Real Sector."

Speakers: Emilios Avgouleas, Giorgio Barba Navaretti, Giacomo Calzolari, Maria Demertzis, Martin Hellwig, Helen Louri and Laura von Daniels Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 6, 2017
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Blog Post

A tangled tale of bank liquidation in Venice

What can we learn about the Italian banking sector from the decision to liquidate Veneto Banca and Banca Popolare di Vicenza? Silvia Merler sees a tendency for Italy to let politics outweigh economics.

By: Silvia Merler Topic: Finance & Financial Regulation Date: June 26, 2017
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