Crisis Management, Burden Sharing and Solidarity Mechanisms in the EU: A follow-up study to Financial Supervision and Crisis Management in the EU

17-06-2010

The financial crisis that began in 2007 as a liquidity crisis for banks has transformed itself into a sovereign debt crisis that threatens the viability of the eurozone and the foundations of the European Union. In this study, we analyse some of the recent regulatory initiatives in response to the crisis and their implications for the EU financial system and economy. Although EU policymakers are adopting important institutional reforms to create a more robust macro-prudential supervisory framework, serious gaps and weakness remain in EU regulation, crisis management, and burden sharing. We conclude that in liberalised international financial markets it will always be very difficult for regulators to control systemic risks and that alternative regulatory approaches should be considered.

The financial crisis that began in 2007 as a liquidity crisis for banks has transformed itself into a sovereign debt crisis that threatens the viability of the eurozone and the foundations of the European Union. In this study, we analyse some of the recent regulatory initiatives in response to the crisis and their implications for the EU financial system and economy. Although EU policymakers are adopting important institutional reforms to create a more robust macro-prudential supervisory framework, serious gaps and weakness remain in EU regulation, crisis management, and burden sharing. We conclude that in liberalised international financial markets it will always be very difficult for regulators to control systemic risks and that alternative regulatory approaches should be considered.

Išorės autorius

Professor Dr. Kern Alexander, Professor Lord Eatwell, Professor Avinash Persaud Mr. Robert Reoch - Centre for Financial Analysis and Policy, University of Cambridge