Policy brief

The role of state aid control in improving bank resolution in Europe

Publishing date
16 May 2010

The financial crisis exposed Europe’s inadequacy in developing an effective banking resolution framework that could bring together national authorities and set guidelines for their coordination. The European Commission, through its assessment of state aid cases, managed to avoid single market distortions and mitigate moral hazard. This Policy Contribution explains why in the long-term Europe needs a single resolution authority. The authors Bruegel Senior Research Fellow André Sapir, Mathias Dewatripont, ULB and CEPR; Gregory Nguyen, National Bank of Belgium, and Peter Praet, National Bank of Belgium, show how in the short-term, the European Commission, through its state aid control discipline, can set the foundation for a new crisis resolution architecture. It can act as a substitute to improve coordination among member states and complement a European resolution authority once it is set up.

About the authors

  • André Sapir

    André Sapir, a Belgian citizen, is Senior Fellow at Bruegel. He is also University Professor at the Université libre de Bruxelles (ULB) and Research Fellow of the London-based Centre for Economic Policy Research.

    Between 1990 and 2004, he worked for the European Commission, first as Economic Advisor to the Director-General for Economic and Financial Affairs, and then as Principal Economic Advisor to President Prodi, also heading his Economic Advisory Group. In 2004, he published 'An Agenda for a Growing Europe', a report to the president of the Commission by a group of independent experts that is known as the Sapir report. After leaving the Commission, he first served as External Member of President Barroso’s Economic Advisory Group and then as Member of the General Board (and Chair of the Advisory Scientific Committee) of the European Systemic Risk Board based at the European Central Bank in Frankfurt.

    André has written extensively on European integration, international trade, and globalisation. He holds a PhD in economics from the Johns Hopkins University in Baltimore, where he worked under the supervision of Béla Balassa. He was elected Member of the Academia Europaea and of the Royal Academy of Belgium for Science and the Arts.

  • Mathias Dewatripont

    He holds a BA (1981) and MA (1982) in economics from ULB and a PhD in Economics from Harvard University (1986). His general research area is the theory of incentives and organizations. Since 1990, he has been Professor of Economics at ULB (part-time between 2011 and 2017). Between 1998 and 2011, he was part-time (7 weeks a year) Visiting Professor at MIT and Research Director of CEPR. Fellow of the Econometric Society, laureate of the 1998 Francqui Prize and of the 2003 Yrjo Jahnsson Prize for Economics, he was President of the EEA in 2005. He was member of the Scientific Council of the European Research Council between 2005 and 2012. He was Managing Editor of the Review of Economic Studies (1990-94) and one of the three Programme co-chairs of the 2000 World Congress of the Econometric Society. He is member of the Académie Royale De Belgique and Foreign Honorary Member of the American Academy of Arts and Science. He was co-Director of ECARES (1991-2002) and, upon the creation of the Solvay Brussels School of Economics and Management, he was its Vice-President (2008-2009), President (2009-2010) and then Dean (2010-2011). He was outside Director of CGER-Bank (1992-99), and he was Executive Director of the National Bank of Belgium between May 2011 and May 2017 (and its Vice-Governor between June 2014 and March 2015), being its representative on the Basel Committee on Banking Supervision (2011-2017) and on the Supervisory Board of the European Central Bank (2014-2017).

     

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