National Interests and Supranational Resolution in the European Banking Union

SAFE Working Paper No. 340

European Banking Institute Working Paper Series 2022 - no. 114

European Business Law Review 34(5), 781-810, forthcoming

25 Pages Posted: 2 Feb 2022 Last revised: 17 May 2023

See all articles by Tobias H. Troeger

Tobias H. Troeger

Leibniz Institute for Financial Research SAFE; Goethe University Frankfurt - Faculty of Law; European Corporate Governance Institute (ECGI)

Anastasia Kotovskaia

Centrum für Europäische Politik

Date Written: February 1, 2023

Abstract

We investigate whether the bank crisis management framework of the European banking union can effectively bar the detrimental influence of national interests in cross-border bank failures. We find that both the internal governance structure and decision-making procedure of the Single Resolution Board (SRB) and the interplay between the SRB and national resolution authorities in the implementation of supranationally devised resolution schemes provide inroads that allow opposing national interests to obstruct supranational resolution. The amendments to the framework recently proposed by the European Commission would not alter the assessment materially. We also show that the Single Resolution Fund (SRF), even after the ratification of the reform of the European Stability Mechanism (ESM) and the introduction of the SRF backstop facility, is inapt to overcome these frictions. We propose a full supranationalization of resolution decision-making. This would allow European authorities in charge of bank crisis management to operate autonomously and achieve socially optimal outcomes beyond national borders.

Keywords: SRB, SRF, bank resolution, banking union, bail-in, ESM, national interest, political economy, bureaucrats’ incentives

JEL Classification: G01, G18, G21, G28, K22, K23

Suggested Citation

Tröger, Tobias Hans and Kotovskaia, Anastasia, National Interests and Supranational Resolution in the European Banking Union (February 1, 2023). SAFE Working Paper No. 340, European Banking Institute Working Paper Series 2022 - no. 114, European Business Law Review 34(5), 781-810, forthcoming, Available at SSRN: https://ssrn.com/abstract=4024343 or http://dx.doi.org/10.2139/ssrn.4024343

Tobias Hans Tröger (Contact Author)

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany
+49 69 798 34391 (Phone)
+49 69 798 34536 (Fax)

HOME PAGE: http://bit.ly/3dQ93nd

Goethe University Frankfurt - Faculty of Law ( email )

Theodor-W.-Adorno-Platz 3 (Westend Campus)
Frankfurt, 60323
Germany
+49 69 798 34391 (Phone)
+49 69 798 34536 (Fax)

HOME PAGE: http://www.jura.uni-frankfurt.de/43940696/English-Version

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.global/users/tobias-tr%C3%B6ger

Anastasia Kotovskaia

Centrum für Europäische Politik ( email )

Schiffbauerdamm 40
Berlin, 10117
Germany

HOME PAGE: http://https://www.cep.eu/cep/team.html

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