scholarly journals European Banking Union – an institutional analysis

2020 ◽  
Vol 5 (1) ◽  
pp. 59-75
Author(s):  
Barbara Majewska-Jurczyk
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
Insurance Scheme ◽  
European Central ◽  
European Banking ◽  
The Creation

Aim: The Banking Union is an important step towards a genuine Economic and Monetary Union. The strengthening of the European banking system has become a topic of debate since the 2008 crisis when it became clear that stability and security of the system security may require increased supervision over operations conducted. The Banking Union was created to avoid the situation that taxpayers are first in line to pay for bailing out ailing banks. The Banking Union consists of three pillars: 1) the Single Supervisory Mechanism (SSM), which centralizes supervision of European banks around the European Central Bank, 2) the Single Resolution Mechanism (SRM), which the main purpose is to ensure the efficient resolution for recapitalization failing banks, and 3) the European Deposit Insurance Scheme (EDIS), which is still unfinished. The creation of the Banking Union is accompanied by a remarkable transfer of sovereignty to the European level. This article aims to provide an overview of the changes unfolding across the Banking Union from a law and economics perspective and to explain the role of the European Central Bank in supervision over the banking system, which is different from the policy of controlling prices through determining the level of interest rates and keeping inflation under control.   Design/Research methods: The analysis of the functioning Banking Union is based on the review of literature and analysis of reports and legal acts.   Findings: The Banking Union supports financial integration in the EU by implementing a common set of rules and a common supervisory and resolution mechanism. The creation of the Deposit Insurance Scheme is likely to contribute to the protection of banks and consumers in case of a potential future crisis. The author argues that the European Central Bank as a supervisor of the financial market should create a second supervisory body, which would significantly strengthen the system and allow the ECB more efficiently fulfill its task as chief supervisor.

scholarly journals The European Central Bank Quantitative Policy and Its Consistency with the Demand for Liquidity

2015 ◽  
Vol 62 (3) ◽  
pp. 425-451 ◽  
Author(s):  
Sviatlana Hlebik ◽  
Giovanni Verga
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Banking System ◽  
Market Conditions ◽  
Policy Strategy ◽  
European Central

Abstract In 2008 the European Central Bank added a new quantitative policy strategy to its traditional control of the interest rates. This new policy, sometimes called “enhanced credit support”, consists of fully satisfying the demand for liquidity of banks, with the European Central Bank deciding only the timing and characteristics of its interventions. This study analyses the market conditions in which these measures have been taken and their consistency with the demand for liquidity by the banking system. Measures in favour of the sovereign debt of PIIGS countries are also considered.

scholarly journals The missing European Deposit Insurance Scheme

2020 ◽  
pp. 151
Author(s):  
Pery Bazoti
Keyword(s):  
Euro Area ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
The European Union ◽  
Risk Minimization ◽  
Insurance Scheme ◽  
European Banking Union ◽  
European Banking

The European Banking Union embarked as a highly ambitious project of the European Union as a response to the signifi cant fl aws and weaknesses in the original architecture of the European Monetary Union that became apparent during the economic crisis. However, the establishment of a single European banking system has stumbled upon the creation of a common deposit insurance scheme that could safeguard depositors and create a more stable fi nancial framework in the euro area. The European Deposit Insurance Scheme (EDIS) was fi rstly introduced by the European Commission in 2015. As a bold proposal that comprises wide risk mutualization among the euro area member states, it has spurred a vivid discussion in the European public speech and many proposals have been made since then altering its original planning in an effort to tackle the moral hazard concerns that have risen. The present article, after discussing the reasons that keep obstructing EDIS, presents these suggestions that move around, primarily, the role of the national deposit guarantee schemes. However, as highlighted in the article, before moving to any alterations on the structure and role of a proposed common deposit insurance scheme, signifi cant risk minimization on behalf of the national banking systems, must precede by limiting the sovereign exposures of banks and the size of the Non-Performing Loans. Such steps of risk minimization are critical for addressing concerns and the political unwillingness demonstrated by several European countries in moving forward towards deeper integration.

scholarly journals Az Európai Központi Bank szerepének átalakulása az európai válságkezelés során = The Changing Role of the European Central Bank during the European Crisis in 2008

2021 ◽  
Vol 16 (1) ◽  
pp. 69-86
Author(s):  
Marcell Zoltán Végh ◽  
Anita Pelle
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Balance Sheet ◽  
Banking Union ◽  
New Era ◽  
European Central ◽  
European Crisis ◽  
Changing Role

Az elhúzódó európai válság során az Európai Központi Bank (EKB) szerepe is átalakult. Egyrészt válság idején, inflációs nyomás helyett deflációs veszéllyel szembesülve, a stabilitás biztosítása mást implikál, mint szokványos időkben. Másrészt tartósan nulla százalék körüli kamat mellett az eszköztárnak kevésbé bevált további elemeit kell bevetni. Az EKB esetében 2010. májusban indult új korszak az első eszközvásárlási programmal, amelyet több hasonló követett. A jegybank mérlege néhány év alatt több mint kétszeresére duzzadt, a legdinamikusabban bővülő tétel eszközoldalon az euróövezetbeli értékpapírok kategóriája lett. Mindeközben az EKB-nak a kiépülő bankunióban is központi szerep jutott. A bankfelügyelet élesítésére 2017 nyarán került sor, az eszközvásárlási programot pedig 2018 végéig vezették ki. Az EKB tehát új és jelentős feladatokat vállalt az európai válságkezelésben, alapvetően sikerrel. In the course of the prolonged European crisis, the role of the European Central Bank (ECB) has also changed. Firstly, in times of crisis, facing risks of deflation instead of inflationary pressure, ensuring stability implies other methods than in usual times. Secondly, with long-lastingly around-zero per cent interest rates, further, less used monetary policy tools are needed. In case of the ECB a new era started in May 2010, with the first asset purchase programme, which was then followed by several similar ones. The central bank’s balance sheet more than doubled in a few years’ time; the most dynamically growing item on the asset side was the category of Eurozone securities. In the meanwhile the ECB was assigned a central role in the newly developed banking union as well. Supervision was put in place in summer 2017 and the asset purchase programme was phased out by the end of 2018. Overall, the ECB undertook new and significant roles in European crisis management – fundamentally with success.

The Legality Of Responses To The Crisis

2020 ◽  
Author(s):  
Alicia Hinarejos
Keyword(s):  
European Union ◽  
Central Bank ◽  
Euro Area ◽  
European Central Bank ◽  
Financial Regulation ◽  
Banking Union ◽  
The European Union ◽  
European Central ◽  
Financial Framework ◽  
The Creation

The euro area crisis required a swift and multi-faceted response. The different facets of this response have already been discussed in this volume: first, a quick intervention was necessary in order to stabilize the situation of euro countries. To this end, several loan facilities were created, and the European Central Bank (ECB) also played an important role in calming down the markets. Second, various measures were adopted in order to improve Member States’ budgetary surveillance and economic coordination. Third, to improve financial regulation and oversight, the European Union (EU) has undertaken important reforms aimed at the creation of a stronger financial framework, and a so-called ‘banking union’ for the euro area.

scholarly journals Causes of The Outbreak of the Eurozone Crises: The Role of the Usa and the European Central Bank Monetary Policy

e-Finanse ◽  
2015 ◽  
Vol 11 (2) ◽  
pp. 47-63
Author(s):  
Natalia Białek
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Institutional Design ◽  
Global Financial Crisis ◽  
European Central ◽  
Low Interest Rates ◽  
The Usa ◽  
The U.S

Abstract This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the U.S. Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008-09. Unusually low interest rates in 2001- 05 compelled investors to engage in high risk endeavors. It also encouraged some governments to finance excessive domestic consumption with foreign loans. Emerging financial bubbles burst first in mortgage markets in the U.S. and subsequently spread to other countries. The paper also reviews other causes of the crisis as discussed in literature. Some of them relate directly to weaknesses inherent in the institutional design of the European Monetary Union (EMU) while others are unique to members of the EMU. It is rather striking that recommended remedies tend not to take into account the policies of the European Central Bank.

Titles II and III: Preparation and Early Intervention

2017 ◽  
Author(s):  
Gabriel Moss QC ◽  
Bob Wessels ◽  
Matthias Haentjens
Keyword(s):  
Early Intervention ◽  
Central Bank ◽  
European Central Bank ◽  
Banking Union ◽  
Financial Situation ◽  
Single Supervisory Mechanism ◽  
European Central ◽  
Early Action ◽  
The Individual

As the European Commission has succinctly explained, ‘institutions will be required to draw up recovery plans setting out arrangements and measures to enable it to take early action to restore its long term viability in the event of a material deterioration of its financial situation. Groups will be required to develop plans at both group level and for the individual institutions within the group. Supervisors will assess and approve recovery plans’. Thus, institutions must draw up ‘recovery plans’ which are to be approved by the relevant supervisory authorities, so as to have a plan in place that might be useful to help turn around a material deterioration of the financial situation that institution may face. The ‘relevant supervisors’ are the European Central Bank (ECB) under the Single Supervisory Mechanism (SSM) for systemically important institutions, and the national supervisory authorities for less systemically important institutions, as well as for institutions outside of the Banking Union.

scholarly journals Guaranteeing the ECB’s democratic accountability in the post-Banking Union era: An ever more difficult task?

2019 ◽  
Vol 26 (1) ◽  
pp. 48-62
Author(s):  
Diane Fromage
Keyword(s):  
European Union ◽  
Central Bank ◽  
European Central Bank ◽  
Banking Union ◽  
Democratic Accountability ◽  
Unconventional Monetary Policy ◽  
The European Union ◽  
Banking Supervision ◽  
National Parliaments ◽  
European Central

Following the Great Financial Crisis, the European Central Bank’s functions have been significantly altered. It is now involved in the functioning of a variety of European Union bodies and agencies, new powers in the field of banking supervision have been attributed to it and it has resorted to unconventional monetary policy. Such a concentration of powers arguably gives rise to issues of accountability and institutional balance within the European Union: (i) the resulting institutional framework is particularly complex and difficult to understand; (ii) the numerous functions the European Central Bank assumes makes it increasingly difficult to identify in which arena(s) it should be held to account for which action; and (iii) its role in the different bodies or agencies may vary in theory and in practice, which, in turn, influences the degree to which the European Central Bank should be held to account. This article aims at showing to what extent the European Central Bank’s role has multiplied and diversified with a view to assess how it is held to account in those different instances, and what the consequences are for the European Central Bank’s democratic accountability, primarily towards the European Parliament, as well as towards the Council of the European Union and national parliaments where applicable.

scholarly journals ECB independence and accountability today: Towards a (necessary) redefinition?

2019 ◽  
Vol 26 (1) ◽  
pp. 3-16
Author(s):  
Diane Fromage ◽  
Paul Dermine ◽  
Phedon Nicolaides ◽  
Klaus Tuori
Keyword(s):  
Financial Crisis ◽  
Central Bank ◽  
European Central Bank ◽  
Banking Union ◽  
Special Issue ◽  
Monetary Policies ◽  
European Central ◽  
Introductory Article ◽  
Recent Developments ◽  
Economic And Financial Crisis

This introductory article sets the ground for the analysis performed in the articles included in this Special Issue. It shows why a new analysis of the European Central Bank (ECB)’s accountability is required by referring to recent developments, and by underlining how much the ECB’s role and standing have changed since its creation 20 years ago. Indeed, its resorting to unconventional monetary policies in response to the recent economic and financial crisis, as well as the creation of the Banking Union, have significantly affected the ECB. This introduction also recalls the main elements of the debate on the balance between accountability and independence, and shows how this balance has evolved. On the basis of the findings of the articles included in this Special Issue, some conclusions and hypotheses as to the way forward are formulated.

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