The Choice for Banking Union: Power, Politics and the Trap of Credible Commitments

The book explains why the European Union (EU) Member States agreed to establish banking union and chose its hybrid institutional design, analyzing the preferences of the Member States and EU institutions, negotiation dynamics, and latest developments in the three pillars of banking union. It also looks beyond the usual focus of the northern and southern coalition of states to underline the influence of powerful smaller Member States in the intergovernmental bargaining process.

Format: Paperback / softback
Length: 234 pages
Publication date: 29 January 2024
Publisher: Taylor & Francis Ltd

The European Union (EU) Member States, in response to the euro crisis, took a significant step by agreeing to establish a banking union, despite previous objections. This decision was driven by the need to strengthen financial stability within the EU and address the challenges posed by the crisis. The book delves into the reasons behind this decision and the choice of a hybrid institutional design for the banking union.

The book spans from 2012 to 2020, providing a comprehensive analysis of the preferences of the Member States and EU institutions involved in the establishment of the banking union. It explores the negotiation dynamics and the latest developments in the three pillars of banking union, namely the Single Supervisory Mechanism, the Single Resolution Mechanism, and the common backstop, as well as the European deposit insurance scheme. Furthermore, the book goes beyond the usual focus on the northern and southern coalition of states and highlights the influence of powerful smaller Member States in the intergovernmental bargaining process.

Adopting a range of theoretical perspectives, the book questions the solidity of the northern versus southern camps and reveals distinctive and particular positioning from individual countries during the process. This study will be of paramount interest to scholars and students of European financial market regulation, European economic governance, EU institutions, European integration theory, and EU politics more broadly.

The establishment of the banking union has had far-reaching implications for the EU's financial landscape and governance. It has aimed to enhance financial stability, promote financial integration, and mitigate the risks associated with cross-border banking. By consolidating supervision and resolution mechanisms, the banking union has aimed to ensure that financial institutions in the EU are better equipped to handle crises and protect depositors.

The hybrid institutional design of the banking union has been a key factor in its success. It combines elements of both national and supranational governance, allowing for a balance between the need for flexibility and the need for coordination. The Single Supervisory Mechanism, for instance, is responsible for supervising banks across the EU, while the Single Resolution Mechanism ensures the resolution of failing banks in a coordinated and efficient manner.

The common backstop, which provides a safety net for member states facing financial difficulties, has also been a contentious issue. While it aims to ensure financial stability, some argue that it could impose a burden on member states and undermine the principles of fiscal sovereignty. However, the recent developments in the banking union, such as the establishment of the European Deposit Insurance Scheme, have aimed to address these concerns and provide additional protection for depositors.

Overall, this book provides a valuable insight into the establishment of the banking union and its implications for the EU's financial stability and governance. It sheds light on the preferences of the Member States and EU institutions, the negotiation dynamics, and the latest developments in the three pillars of banking union. By examining the influence of smaller Member States and challenging the traditional binary of the north and south, the book offers a fresh perspective on the EU's intergovernmental bargaining process.

In conclusion, this book is a must-read for scholars and students interested in European financial market regulation, European economic governance, EU institutions, European integration theory, and EU politics. It provides a comprehensive analysis of the banking union's establishment and its implications for the EU's financial stability and governance. The book's insights will be valuable to policymakers, practitioners, and anyone seeking to understand the complex dynamics of the EU's financial system.

Weight: 370g
Dimension: 234 x 155 x 16 (mm)
ISBN-13: 9780367721961