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EU framework for safeguarding financial stability: Towards an analytical benchmark for assessing its effectiveness

Author

Listed:
  • María J. Nieto

    (Banco de España)

  • Garry J. Schinasi

    (International Monetary Fund)

Abstract

European finance is becoming increasingly cross-border, while the European architecture for safeguarding financial stability —including decision-making processes for providing financial-stability public goods— have remained decentralized with some explicit mechanisms for coordination across countries. Policy makers are aware of the limitations of the existing institutional setting, but opinions on how to proceed, including on burden sharing, are lining up along national and regional political lines with less attention paid to European needs. This paper applies the ‘economics of alliances’ to examine these European policy challenges. The paper establishes benchmarks for assessing the ability of Europe’s existing institutional architecture to efficiently allocate resources to safeguard the EU financial system against systemic threats to stability, such as the insolvency of a pan European bank.

Suggested Citation

  • María J. Nieto & Garry J. Schinasi, 2008. "EU framework for safeguarding financial stability: Towards an analytical benchmark for assessing its effectiveness," Occasional Papers 0801, Banco de España.
    • Handle: RePEc:bde:opaper:0801
    as

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/08/Fic/do0801e.pdf
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    Cited by:

    1. Elisabetta Montanaro, 2016. "The process towards centralisation of the European financial supervisory architecture: The case of the Banking Union," PSL Quarterly Review, Economia civile, vol. 69(277), pages 135-172.
    2. Antonio Moreno & Steven Ongena & Alexia Ventula Veghazy & Alexander F. Wagner, 2024. "“Long GFC”? The global financial crisis, health care, and COVID‐19 deaths," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 865-891, April.
    3. Masciandaro, Donato & Nieto, Maria J. & Quintyn, Marc, 2011. "Exploring governance of the new European Banking AuthorityâA case for harmonization?," Journal of Financial Stability, Elsevier, vol. 7(4), pages 204-214, December.
    4. Maria J. Nieto & Larry D. Wall, 2018. "Cross-border banking on the two sides of the Atlantic: Does it have an impact on bank crisis management?," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(1), pages 4-17, January.
    5. Nedelchev, Miroslav, 2015. "Coordination of banking regulation in the EU," MPRA Paper 66073, University Library of Munich, Germany, revised 2015.
    6. Lucia Quaglia & Robert Eastwood & Peter Holmes, 2009. "The Financial Turmoil and EU Policy Co‐operation in 2008," Journal of Common Market Studies, Wiley Blackwell, vol. 47(s1), pages 63-87, September.
    7. Hertig Gerard & Lee Ruben & McCahery Joseph A., 2010. "Empowering the ECB to Supervise Banks: A Choice-Based Approach," European Company and Financial Law Review, De Gruyter, vol. 7(2), pages 171-215, January.
    8. International Monetary Fund, 2009. "A European Mandate for Financial Sector Supervisors in the EU," IMF Working Papers 2009/005, International Monetary Fund.
    9. Maria J. Nieto & Garry J. Schinasi, 2008. "Towards an EU Framework for Safeguarding Financial Stability," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(03), pages 27-36, October.
    10. repec:ces:ifodic:v:6:y:2008:i:3:p:14567250 is not listed on IDEAS
    11. Gillian G.H. Garcia & Rosa M. Lastra & María J. Nieto, 2009. "Bankruptcy and reorganization procedures for cross‐border banks in the EU," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 17(3), pages 240-276, July.
    12. International Monetary Fund, 2008. "Cross-Border Coordination of Prudential Supervision and Deposit Guarantees," IMF Working Papers 2008/283, International Monetary Fund.
    13. Nadri , Kamran & Ebrahimi , Sajad & Fadaie , Abbas, 2018. "Assessment of Financial Stability in the Banking Sector in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 13(4), pages 501-523, October.
    14. María J. Nieto & Dalvinder Singh, 2021. "Incentive compatible relationship between the ERM II and close cooperation in the Banking Union: the cases of Bulgaria and Croatia," Occasional Papers 2117, Banco de España.
    15. Jean Pisani-Ferry & André Sapir, 2009. "Banking Crisis Management in the EU- An Interim Assessment," Working Papers 359, Bruegel.
    16. repec:bla:jcmkts:v:47:y:2009:i::p:63-87 is not listed on IDEAS
    17. Iman van Lelyveld & Marco Spaltro, 2011. "Coordinating Bank Failure Costs and Financial Stability," DNB Working Papers 306, Netherlands Central Bank, Research Department.
    18. Dr. Rezarta Shkurti (Perri) & Dr. Brunilda Duraj, 2010. "The Assessment Of The Financial Soundness Of The Banking Sectors In Balkan Countries Using "Early Warning Indicators" - A Comparative Study With Policy Implications," Journal Articles, Center For Economic Analyses, pages 33-48, June.
    19. Vítor Gaspar, 2010. "Financial Stability and Policy Cooperation," Working Papers o201001, Banco de Portugal, Economics and Research Department.
    20. Miroslav Nedelchev, 2018. "Cooperation Among Eu Banking Supervisory Authorities: A Game Model," Economics and Management, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 14(2), pages 11-19.
    21. Grégory Nguyen, 2008. "Burden-sharing agreements : the cart before the horse ?," Financial Stability Review, National Bank of Belgium, vol. 6(1), pages 119-132, June.

    More about this item

    Keywords

    Safeguarding EU financial stability; crisis resolution; burden sharing;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • F3 - International Economics - - International Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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