The Side Effects of National Financial Sector Policies: Framing the Debate on Financial Protectionism

42 Pages Posted: 27 Sep 2015

See all articles by Roland Beck

Roland Beck

European Central Bank (ECB)

John Beirne

European Central Bank (ECB)

Francesco Paternò

Bank of Italy

Jolanda Peeters

De Nederlandsche Bank

Julio Ramos-Tallada

Banque de France

Cyril Rebillard

International Monetary Fund (IMF)

Dennis Reinhardt

Bank of England

Lisa Weißenseel

Deutsche Bundesbank

Julia Wörz

Oesterreichische Nationalbank (OeNB)

Date Written: September 25, 2015

Abstract

The decrease of financial integration both at the global and European level reflects, to a certain extent, a market response to the crisis. It might, however, also be partly driven by policies such as capital flow management measures (CFMs). In addition, several other measures taken by central banks, regulators and governments in response to the crisis may have had less obvious negative side effects on financial integration. Against this backdrop, this paper explores broad definitions of financial protectionism in order to raise awareness of the fact that the range of policies which could negatively affect financial integration may be much wider than residency-based CFMs. At the same time, the paper acknowledges that these measures have mostly been taken for legitimate financial stability purposes and with no protectionist intentions. The paper considers five categories of policy measures which could contribute to financial fragmentation both at the global and at the EU level: currency-based measures directed towards banks, geographic ring fencing, some financial repression policies, crisis resolution policies with a national bias, and some financial sector taxes.

Keywords: Financial integration, financial protectionism, macro-prudential policy, capital controls

JEL Classification: F36, F42, F62

Suggested Citation

Beck, Roland and Beirne, John and Paternò, Francesco and Peeters, Jolanda and Ramos-Tallada, Julio and Rebillard, Cyril and Reinhardt, Dennis and Weißenseel, Lisa and Wörz, Julia, The Side Effects of National Financial Sector Policies: Framing the Debate on Financial Protectionism (September 25, 2015). ECB Occasional Paper No. 166. Available at SSRN: https://ssrn.com/abstract=2665733

Roland Beck (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

John Beirne

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Francesco Paternò

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Jolanda Peeters

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Julio Ramos-Tallada

Banque de France ( email )

Paris
France

Cyril Rebillard

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Dennis Reinhardt

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Lisa Weißenseel

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Julia Wörz

Oesterreichische Nationalbank (OeNB) ( email )

Otto-Wagner-Platz 3, PO Box 61
Vienna,
1010 Vienna, A-1011
Austria

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