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Making the Banking Union effective: what priorities?

Day 3 Morning

Friday 13 September

Room :

Fennia II - Roundtable

Speakers

Chair
Klaas Knot - President, De Nederlandsche Bank
Public Authorities
Robert Holzmann - Governor, Oesterreichische Nationalbank
Madis Müller - Governor, National Bank of Estonia
Boris Vujčić - Governor, Croatian National Bank
Industry Representatives
José Manuel González-Páramo - Executive Member of the Board and Chief Officer, Global Economics & Public Affairs, BBVA
Diederik van Wassenaer - Global Head Regulatory and International Affairs, ING

Objectives of the session

The establishment of the Banking Union was not the result of a collective visionary reflection by EU leaders on how best to address the fundamental issues that are deeply rooted in the EU financial markets: unsustainable fiscal deficits and debts, lack of a true macroeconomic surveillance leading to increasing non- performing loans (NPLs), regulatory fragmentation, an excessive number and dispersion of banks in the EU, the low efficiency of the banking market in Europe…

The idea only got traction in the midst of the European financial and sovereign crisis and was motivated by the need to ensure financial stability and contain the increasingly evident risks to the survival of the single currency. The Banking Union was thus created to break the link between banks and States and solve the banking crisis. Since the establishment of the Single Supervisory Mechanism 5 years ago, the Banking Union has been successful in promoting a more resilient banking system. But it is still failing to deliver an integrated domestic market for banking business.

The objective of this session is to assess the reasons why banking systems remain so fragmented in the eurozone despite the implementation of the Single Supervisory Mechanism and the Single Resolution Mechanism and to discuss the EU policy priorities needed for making the Banking Union effective and stronger vis-à-vis the rest of the world. Some of the self-inflicted pain, mainly caused by fragmentation, should be removed in order to create a really competitive EU banking sector.

The panel will primarily focus on the necessary policy actions to finally get rid of the remaining stock of non-performing loans and correct ring-fencing policies in the Banking Union (home/host concerns).

Points of discussion

Why has the Banking Union failed to provide the degree of financial integration that was expected?

Which EU policy priorities could overcome the fragmentation of the EU banking sector?