EconPapers    
Economics at your fingertips  
 

Framing Banking Union in the Euro Area: Some empirical evidence

Diego Valiante

CEPS Papers from Centre for European Policy Studies

Abstract: Evidence shows that financial integration in the euro area is retrenching at a quicker pace than outside the union. Home bias persists: Governments compete on funding costs by supporting ‘their’ banks with massive state aids, which distorts the playing field and feeds the risk-aversion loop. This situation intensifies friction in credit markets, thus hampering the transmission of monetary policies and, potentially, economic growth. This paper discusses the theoretical foundations of a banking union in a common currency area and the legal and economic aspects of EU responses. As a result, two remedies are proposed to deal with moral hazard in a common currency area: a common (unlimited) financial backstop to a privately funded recapitalisation/resolution fund and a blanket prohibition on state aids.

Pages: 26 pages
Date: 2014-02
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
http://www.ceps.eu/system/files/WD389%20DV%20Banking%20Union.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.ceps.eu/system/files/WD389%20DV%20Banking%20Union.pdf [302 Found]--> https://www.ceps.eu//system/files/WD389%20DV%20Banking%20Union.pdf [301 Moved Permanently]--> https://www.ceps.eu/system/files/WD389%20DV%20Banking%20Union.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eps:cepswp:8882

Access Statistics for this paper

More papers in CEPS Papers from Centre for European Policy Studies Contact information at EDIRC.
Bibliographic data for series maintained by Margarita Minkova ().

 
Page updated 2020-06-06
Handle: RePEc:eps:cepswp:8882