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European Banking Union: Status of Implementation and the Need for Improvement

Bauer, M. & Demary, M. (2014) “European Banking Union: Status of Implementation and the Need for Improvement“, Konrand Adenauer Stiftung, 23 April.

 

The crisis in the euro area revealed points of weakness in the architecture of the Monetary Union. It appeared that the common monetary policy also required a common system of banking supervision. This report summarises the current proposals and decisions regarding the Banking Union and evaluates the Banking Union’s three pillars – banking supervision, bank resolution and common standards for deposit guarantees – from a regulatory economic perspective.

This report summarises the current proposals and decisions regarding the Banking Union and evaluates the Banking Union’s three pillars -banking supervision, bank resolution and common standards for deposit guarantees- from a regulatory economic perspective. Particular emphasis is placed on the proposed design of the resolution mechanism and coordination of national deposit guarantee systems and their consequences for Germany’s banking system. The consequences for private institutional guarantee systems are also analysed. The planned exemption provisions for creditor involvement are also discussed critically, as is the European Commission’s proposed right of last decision for cases of bank resolution and the lack of capital requirements for European government bonds.

 

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