The Single Supervisory Mechanism – Panacea or Quack Banking Regulation? : Preliminary assessments of the evolving regime for the prudential supervision of banks with the ECB involvement (August 16, 2013)

This paper analyzes the evolving architecture for the prudential supervision of banks in the euro area. It is primarily concerned with the likely effectiveness of the SSM as a regime that intends to bolster financial sta
This paper analyzes the evolving architecture for the prudential supervision of banks in the euro area. It is primarily concerned with the likely effectiveness of the SSM as a regime that intends to bolster financial stability in the steady state.
By using insights from the political economy of bureaucracy it finds that the SSM is overly focused on sharp tools to discipline captured national supervisors and thus under-incentives their top-level personnel to voluntarily contribute to rigid supervision. The success of the SSM in this regard will hinge on establishing a common supervisory culture that provides positive incentives for national supervisors. In this regard, the internal decision making structure of the ECB in supervisory matters provides some integrative elements. Yet, the complex procedures also impede swift decision making and do not solve the problem adequately. Ultimately, a careful design and animation of the ECB-defined supervisory framework and the development of inter-agency career opportunities will be critical.
The ECB will become a de facto standard setter that competes with the EBA. A likely standoff in the EBA’s Board of Supervisors will lead to a growing gap in regulatory integration between SSM-participants and other EU Member States.
Joining the SSM as a non-euro area Member State is unattractive because the cur-rent legal framework grants no voting rights in the ECB’s ultimate decision making body. It also does not supply a credible commitment opportunity for Member States who seek to bond to high quality supervision.
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Metadaten
Author:Tobias Tröger
URN:urn:nbn:de:hebis:30:3-315503
URL:http://ssrn.com/abstract=2311353
DOI:http://dx.doi.org/10.2139/ssrn.2311353
Parent Title (German):SAFE working paper series ; No. 27
Series (Serial Number):SAFE working paper series (27)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Date of Publication (online):2013/09/02
Year of first Publication:2013
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2013/09/04
Tag:European Banking Authority (EBA); European Central Bank (ECB); banking union; political economy of bureaucracy; prudential supervision; regulatory capture
Pagenumber:45
First Page:1
Last Page:42
HeBIS PPN:348850123
Institutes:Rechtswissenschaft
Wirtschaftswissenschaften
House of Finance (HoF)
Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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