Incentive Compatible Relationship between Ermii and Close-Cooperation in the Banking Union: The Case of Bulgaria and Croatia

31 Pages Posted: 23 Dec 2020

See all articles by Maria Nieto

Maria Nieto

Banco de España

Dalvinder Singh

University of Warwick - School of Law

Date Written: December 18, 2020

Abstract

The ambition to expand participation in the European Banking Union was to allow the ‘outs’ to enter in to close cooperation, however, it did not include the simultaneous joining of ERM II. Focusing on the cases of Bulgaria and Croatia, this paper attempts to respond to a number of questions: What is the rationale behind the double requirement of having to simultaneously apply to become a member of the ERM II and to prepare to become a member of the Banking Union via rule based “close cooperation” mechanism of coordination between the EU non-euro area NCAs and the ECB? Does the integration of close cooperation countries' banking systems with the euro area banking systems support the decision to join ERM II and ¨opting-in¨ to the SSM? Do the existing “close cooperation” arrangements guarantee greater coordination of resource-allocating decisions on prudential supervision and improved internalization of financial stability decisions? What are the advantages of the preparation to become a full member of the euro area and the SSM (e.g. coordination of macro and micro-prudential regulation; coordination of micro-prudential supervision and bank resolution)? It is evident from the research undertaken in this paper that there are clear benefits from close cooperation for the respective Member States whose domestic currencies are already linked to the euro in view of the dominant position eurozone banks have in their respective domestic markets.

Keywords: Banking Union, Close Cooperation, ERM II

JEL Classification: E02, E44, F15, G15, G21, H12, K23

Suggested Citation

Nieto, Maria J. and Singh, Dalvinder, Incentive Compatible Relationship between Ermii and Close-Cooperation in the Banking Union: The Case of Bulgaria and Croatia (December 18, 2020). BAFFI CAREFIN Centre Research Paper No. 2020-150, Available at SSRN: https://ssrn.com/abstract=3749876 or http://dx.doi.org/10.2139/ssrn.3749876

Maria J. Nieto

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Dalvinder Singh (Contact Author)

University of Warwick - School of Law ( email )

Gibbet Hill Road
Coventry CV4 7AL, CV4 7AL
United Kingdom
024 76150675 (Phone)
024 76524104 (Fax)

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/law/staff/academic/dalvinder

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
34
Abstract Views
214
PlumX Metrics