Financial Crisis and Single European Banking Supervision: Implications for the Financial Services Market

This paper aims to examine some significant implications of the new European single banking supervision for the economics of banking and the market of financial services. It is one of the three pillars of the European Banking Union architecture, as part of a longer-term vision for further economic and monetary integration in EU. The new supervisory mechanisms implies a huge and complex transfer of powers from national authorities to the European Central Bank. It aims to ensure the safety and soundness of the European banking system, to increase financial integration and stability, and to permit consistent supervision. Banks are being held to common supervisory standards. The structure of this paper is as follows. Section 1 introduces the paper and outlines the general context of the study. Section 2 analyzes some organizational and regulatory issues of the single supervisory scheme. Section 3 examines the comprehensive assessment of the main banks performed by the European Central Bank together with the national supervisors. Section 4 discusses the implications of the single supervisory mechanism for banks' business models and management, and explores some of the challenges likely to be faced by the supervised banks. This section also sheds some lights on relevant drawbacks of the single prudential supervisory approach. Section 5 concludes.