Delivering the Eurozone ‘Consistent Trinity’

Marco Buti, Maria Demertzis, João Nogueira Martins, 30 March 2014

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As argued in an earlier commentary, the financial crisis exposed important economic inconsistencies in the way that EMU operated.1 Although progress has been made, the reality is that more needs to be done.

Topics: Europe's nations and regions, Macroeconomic policy
Tags: banking union, debt, EMU, euro, eurozone, Eurozone crisis, fiscal consolidation, fiscal policy, imbalances, internal devaluation, Stability and Growth Pact, structural reforms

The AQR and stress testing the European banking system

Viral Acharya interviewed by Viv Davies, 14 Mar 2014

Viral Acharya talks to Viv Davies about his recent work with Sascha Steffen that, using publicly available data and a series of shortfall measures, estimates the capital shortfalls of EZ banks that will be stress-tested under the proposed Asset Quality Review. They also discuss the difference in accounting rules between US and EZ banks and the future potential for banking union in the Eurozone. The interview was recorded by phone on 25 February 2014.

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See Also

Acharya, V and S Steffen (2014) "Falling short of expectations? Stress-testing the European banking system", VoxEU.org, 17 January.

Transcript

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Topics: Financial markets
Tags: Asset Quality Review, bank capital, banking, banking union, banks, Eurozone crisis, recapitalisation, stress testing, systemic risk

The limits to partial banking unions: A political economy approach

Octavia Foarta, 2 February 2014

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A key concern of policymakers following the Eurozone banking crises has been how to design common rules for public interventions in the banking sector. Recent proposals aim at creating a banking union to complement the Eurozone monetary union, and reduce the risk of contagion generated by cross-border spillovers from bank failures (Bolton and Jeanne 2013).

Topics: EU policies, Global crisis
Tags: bank recapitalisation, banking union, Political Economy

Falling short of expectations? Stress-testing the European banking system

Viral Acharya, Sascha Steffen, 17 January 2014

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The Eurozone is mired in a recession. In 2013, the GDP of the 17 Eurozone countries fell by an average of 0.5%, and the outlook for 2014 shows considerable risks across the region. To stabilise the common currency area and its (partly insolvent) financial system, a Eurozone banking union is being established.

Topics: Financial markets
Tags: Asset Quality Review, bank capital, banking, banking union, banks, Eurozone crisis, recapitalisation, stress testing, systemic risk

Why fiscal sustainability matters

Willem Buiter, 10 January 2014

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Does fiscal sustainability matter only when there is a fiscal house on fire, as was the case with the Greek sovereign insolvency in 2011–12? Far from it.

Topics: Financial markets, Global crisis, International finance, Macroeconomic policy
Tags: balance-sheet recession, banking, banking union, banks, capital flows, credit booms, Currency wars, emerging markets, eurozone, Eurozone crisis, financial crisis, fiscal policy, fiscal sustainability, global financial crisis, sovereign debt, sovereign debt restructuring

Single supervision and resolution rules: Is ECB independence at risk?

Donato Masciandaro, Francesco Passarelli, 21 December 2013

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A successful transition to a European Banking Union requires robust and credible ‘Chinese walls’ between the ECB’s role as monetary authority and any responsibility in the Single Supervisory Mechanism or in the resolution rules. Otherwise, the ECB’s independence would be at risk, given that monetary policy would likely have larger distributional effects.

Topics: EU institutions, Financial markets
Tags: bank resolution, banking regulation, banking union, central bank independence, Central Banks, ECB, global financial crisis

The new Single Bank Resolution Mechanism of the European Union

Stefano Micossi, 30 November 2013

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A banking union in Europe is essential to the long-run stability of the Eurozone (Draghi 2013 ). It will be built on three pillars:

  • A single supervisory mechanism.

The necessary regulation for this is already in force.

Topics: EU institutions, Financial markets
Tags: bail-in, bank resolution, banking union

How to limit the ECB’s OMT?

Harald Benink, Harry Huizinga, 12 July 2013

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Speaking about the Outright Monetary Transactions (OMT) facility during a recent press conference Mario Draghi, ECB President, said that “frankly, when you look at the data, it’s really very hard not to state that OMT has been probably the most successful monetary policy measure undertaken in recent times” (Draghi 2013).

Topics: Europe's nations and regions
Tags: banking union, Eurozone crisis, OMT

A banking union for the Eurozone

Giovanni Dell'Ariccia, Rishi Goyal, Petya Koeva-Brooks, Thierry Tressel, 5 April 2013

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Before the crisis, the common currency and single market promoted financial integration. Banks and financial institutions operated with ease across countries; credit went where it was in demand; and portfolios became increasingly more diversified. The interbank market functioned smoothly, and monetary conditions were relatively uniform across the Eurozone.

Topics: EU institutions, EU policies
Tags: banking union, Eurozone crisis, regulation

Europe’s Cyprus blunder and its consequences

Nicolas Véron, 25 March 2013

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The late Mike Mussa1 noted that “there are three types of financial crises:

  • crises of liquidity;
  • crises of solvency; and
  • crises of stupidity.”

This quip comes to mind when considering the developments of the past ten days around Cyprus.

Topics: EU institutions, Macroeconomic policy
Tags: banking union, Cyprus, deposit guarantees, Eurozone crisis

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