Cross-Border Coordination of Prudential Supervision and Deposit Guarantees
28 Pages Posted: 18 Dec 2008
Date Written: December 2008
The scramble to expand deposit guarantees in Europe in response to recent financial turmoil confirms that the on-going integration of European financial markets requires closer coordination of prudential policies and financial safety nets. We study the optimal design of prudential supervision and deposit guarantee regulations in a multi-country, integrated banking market such as the European Union, where policy-makers have either similar or asymmetric preferences regarding profitability and stability of the banking sector. The paper concludes with recommendations on policy priorities in this area.
Keywords: Deposit insurance, Europe, European Economic and Monetary Union, Economic integration, Bank supervision, Banking sector, Social safety nets, International cooperation
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