EU Framework for Safeguarding Financial Stability: Towards an Analytical Benchmark for Assessing its Effectiveness

25 Pages Posted: 20 Nov 2007

See all articles by Maria Nieto

Maria Nieto

Banco de España

Garry J. Schinasi

Independent Advisor, Global Financial Stability

Multiple version iconThere are 2 versions of this paper

Date Written: November 2007

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.

Keywords: Financial crisis, Europe, Burden sharing, Social safety nets, Financial system

Suggested Citation

Nieto, Maria J. and Schinasi, Garry J., EU Framework for Safeguarding Financial Stability: Towards an Analytical Benchmark for Assessing its Effectiveness (November 2007). IMF Working Papers, Vol. , pp. 1-23, 2007. Available at SSRN: https://ssrn.com/abstract=1030689

Maria J. Nieto (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Garry J. Schinasi

Independent Advisor, Global Financial Stability ( email )

Washington, 20008
+1-202-361-0958 (Phone)

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