The Liquidationist ‘Genie’ Within the Eurozone’s Banking Union

41 Pages Posted: 7 Feb 2020

See all articles by Ricardo Cabral

Ricardo Cabral

Universidade da Madeira; Centre of Applied Economics Studies of the Atlantic (CEEAplA)

Date Written: January 2, 2020

Abstract

The Banking Union increased bank capital requirements and tightened crisis response policy instruments, favoring bank resolutions or liquidations, while hindering bank bailouts. The ECB has gained new powers as the Eurozone's main supervisory authority and as the leading 'resolution or liquidation' authority. The new framework has led to the multiplication of triggers for the application of resolution or liquidation measures. As a result, the Banking Union has had significant fiscal costs and large redistributive effects. Further, it has weakened financial stability and the 'irreversibility of the euro'.

Keywords: Resolution, liquidation, financial stability, Banking Union, liquidationist thesis

JEL Classification: E58, G00, G21, G28

Suggested Citation

Cabral, Ricardo, The Liquidationist ‘Genie’ Within the Eurozone’s Banking Union (January 2, 2020). Available at SSRN: https://ssrn.com/abstract=3513078 or http://dx.doi.org/10.2139/ssrn.3513078

Ricardo Cabral (Contact Author)

Universidade da Madeira ( email )

Campus Universitario da Penteada
9000-390 Funchal
United States

Centre of Applied Economics Studies of the Atlantic (CEEAplA)

Portugal

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