Rethinking the allocation of macroprudential mandates within the Banking Union – a perspective from east of the BU

Abstract

This paper argues that reforms of the Banking Union should be aimed at increasing efficiency of the single market as well enhance financial stability in the European Union. We argue that this can only be achieved if the Banking Union becomes more accommodative to non-Eurozone Central and Eastern European countries. It can be achieved if within BU institutions, the allocation of competencies reflects the subsidiary demands of CEE governments. Using the example of macroprudential regulation, we develop a number of reform options that could result in the better functioning of the Single Supervisory Mechanism and thus benefit all EU member states.

Keywords:

• Banking Union
• European Union
• banking regulation
• macroprudential policy
• Central and Eastern Europe

JEL Classification:

• G28

Notes

1. The other two non-Eurozone CEE countries, Bulgaria and Romania, expressed their interest in close cooperation with the BU, however, as of June 2017 they did not send opt-in request to ECB.

2. The European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA).

3. After adoption by the Commission, the Binding Technical Standards are issued as Regulations or Directives applicable in all member states.

4. Article 124 and 164 of CRR.

5. Article 103 and 105 of CRD.

6. Recommendation of the European Systemic Risk Board of June 2014 on guidance for setting countercyclical buffer rates (ESRB/C 293/01).

7. Commission Implementing Regulation (Eu) No. 1030/2014 of 29 September 2014.

8. EBA/GL/2014/10.

9. Article 458 of CRR.

10. Council Regulation(EU) No 1024/2013.

11. The EBRD (2012, 59) suggested to modify the ESM treaty in a way which would allow the SSM members to join in even without being Eurozone member state. It also suggested to give access to ECB’s swap lines to all SSM member states in case of liquidity need.

12. The UniCredit (2013) also suggested the extension of ECB’s swap line to non-eurozone member states of SSM, as a tool that can offset the loss of domestic macroprudential control.