Reducing Systemic Risk in Europe: Is the 'Banking Union’ a Big Enough Step?

Warin, Thierry (2015) Reducing Systemic Risk in Europe: Is the 'Banking Union’ a Big Enough Step? [Conference Proceedings] (Submitted)

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Abstract

The 2008 crisis started as a financial crisis and evolved into a sovereign debt crisis. Since 2008, central banks, governments and international organizations have been working on the lessons learned as well as designing options for a new financial framework. From the Dodd-Frank Act in the United States to Basel III, the international financial world has seen relevant changes. In Europe, the 'Banking Union' was passed. In itself, it is already an interesting reform. But beyond the primary objective of the Banking Union, which is to ensure financial stability, there is also a second feature: it deepens the European integration providing a response to the critics of the European project. Now equipped with an internal market of goods, services, including financial services, the question is to know whether the EU has fixed its structural issues in terms of governance. If a new crisis were to hit Europe, would the latter be better prepared to respond? Another question is to know whether this new framework would reduce the systemic risk and thus would reduce either the likelihood or the magnitude of a crisis?

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