Past Event

Completing the Banking Union

The Five Presidents’ report published in July 2015 argues that completing the banking union should be one of the most immediate steps of the broader project of “Completing Europe’s economic and monetary union”. However, the urgency and importance of this step is contested.

Date: November 24, 2015, 2:00 pm Topic:

This is an off-the-record seminar for selected invitees only, taking place in Paris.

The Five Presidents’ report published in July 2015 argues that completing the banking union should be one of the most immediate steps of the broader project of “Completing Europe’s economic and monetary union”. However, the urgency and importance of this step is contested. Completing the banking union involves some forms of fiscal backing (a bridge financing of the Single resolution Fund – SRF, ESM recapitalization instrument), some mutualisation of banking risks (through a common deposit insurance scheme) as well as decreased linkages between banks and sovereigns through overly large investments in sovereign bonds of countries, in which the respective bank is located.

The objective of this off-the-record seminar is to discuss the requirements for completing the banking union at the expert level. Several arguments need to be carefully weighted. The theory of insurance prescribes that a common deposit insurance scheme (or a fiscal backing to the SRF) should be introduced “behind the veil of ignorance”, which is not the current situation of the euro area. However, waiting before risks are equally distributed could maintain the vulnerability of the euro area to a bank run. The Greek crisis has raised questions as regards to whether or not stronger common deposit insurance mechanisms could help preventing large deposit outflows, which were mostly a reaction to re-denomination risks. Others have argued that constraints on banks’ holding of sovereign bonds could increase financial instability, especially once the ECB’s quantitative easing programme comes to an end.

Schedule

Nov 24, 2015

13.30 - 14.00

Check-in and Coffee

14.00 - 15.15

Session 1. Ending the sovereign-bank loop

Chair:

Francesco Giavazzi, Professor of Economics, Bocconi University

Levin Holle, Director General, Financial Markets Policy, Federal Ministry of Finance, Germany

Nicolas Véron, Senior Fellow

Paul Hilbers, Director Financial Stability, De Nederlandse Bank

15.15 - 15.45

Break

15.45 - 17.00

Session 2. Deposit insurance and fiscal backing

Chair: Guntram B. Wolff, Director

Corso Bavagnoli, Head of Department for Financing of the Economy, French Treasury

Daniel Gros, Director, Centre for European Policy Studies

Dirk Schoenmaker, Non-Resident fellow

Wolf Wagner, Professor, Erasmus University of Rotterdam

Speakers

Corso Bavagnoli

Head of Department for Financing of the Economy, French Treasury

Francesco Giavazzi

Professor of Economics, Bocconi University

Daniel Gros

Director, Centre for European Policy Studies

Levin Holle

Director General, Financial Markets Policy, Federal Ministry of Finance, Germany

Dirk Schoenmaker

Non-Resident fellow

Wolf Wagner

Professor, Erasmus University of Rotterdam

Guntram B. Wolff

Director

Agnès Bénassy-Quéré

Member of the board

Location & Contact

France Stratégie, 18, rue Martignac, 75007 Paris, France