Banking union: the problem of untried systems. Issue 3 (3rd July 2018)

• Record Type: Journal Article
• Authors: Mayes, David G.
• Is Part Of: Journal of economic policy reform. Volume 21:Issue 3(2018)
• Page Start: 178
• Page End: 189
• Publication Date: 2018-07-03
• Subjects: Banking union -- bail in -- bail out -- single resolution board -- too big to fail; Economic policy -- Periodicals; Commercial policy -- Periodicals; Monetary policy -- Periodicals; International trade -- Periodicals; Developing countries -- Economic policy -- Periodicals; Former Soviet republics -- Economic policy -- Periodicals; Post-communism -- Periodicals; Policy sciences -- Periodicals; 338.9
• DOI: 10.1080/17487870.2017.1396901
• Languages: English
• ISSNs: 1748-7870

Abstract

Abstract : This article explores the problems the EU and the SRB face in trying to implement a credible system for resolving banks without the use of taxpayer funds as a key part of banking union that avoids the doom loop between indebted banks and indebted sovereigns. It finds that without clear examples of how the system works in practice it is very difficult to provide convincing evidence of what will happen given the large number of options for bailing in, the continuing predilection for bailing out in some states and the lack of fiscal backstop for general threats to financial stability.