Do we have the necessary safeguards in place to prevent a new financial crisis?
After the global financial crisis in 2007-2008, reforming the financial sector was at the top of the European agenda. Ten years later, however, observers question the extent of regulatory achievements.
Did the historic momentum for comprehensive reform translate into new, more effective ways of regulating finance? Or, did the crisis quickly become a distant memory, unable to drive forward the politically challenging agenda of tightening financial regulation in Europe in the midst of an economic recession?
Some argue that the European Banking Union – a cornerstone of the post-crisis regulatory response in Europe – recently suffered a major blow.
In June, the European Commission approved the Italian government’s state-sponsored resolution of two Italian banks. Many observers argued that this not only violated European competition law, but also compromised one of the founding principles of the banking union itself – that taxpayer-money should no longer be used to bail out failing banks in Europe.
If member states have difficulties adhering even to the principles of what many considers a somewhat half-baked version of a banking union, how well will this new institutional architecture fare in the face of a full-fledged financial crisis? Read more