Global banking crisis as the main cause of the Eurozone crisis

Andrzej Sławiński

Abstract


The global banking crisis which caused the Eurozone crisis was unexpected. Before the banking crisis started, the prevailing view was that due to scientific advances in risk management banks would be able to continuously adjust their potential losses to their capital in order to avoid insolvency. This conviction turned out to have been false following the emergence of large financial holdings which were too big and too interconnected to be efficiently managed and supervised. In the paper it is argued that an effective banking reform should impose a strict separation between commercial, investment and mortgage banks (at least within the existing financial holdings) to make them more manageable and resolvable. The proposed reform of the European banking system, put forward in Liikanen Report, is still insufficient to shield the Eurozone from subsequent banking crises which might endanger its stability and growth prospects.

Keywords


Eurozone crisis, banking reform

Full Text:

PDF (Język Polski)

References


Aizenman J. (2014), The Eurocrisis: Muddling through, or on the way to a more perfect euro zone?, „NBER Working Paper”, No. 20 242, June 2014.

Ang A. (2011), Hedge Funds Leverage, „NBER Working Paper”, No. 16 801.

De Grauwe P. (2008), Returning to Narrow Banking, „CEPS Commentary”, No. 14.

De Grauwe P. (2011), The Governance of a Fragile Eurozone, „CEPS Working Document”, No. 346, May 2011.

De Grauwe P., Ji Y. (2013), Self-fulfilling Crises in the Eurozone: An Empirical Test, „Journal of International Money and Finance”, Vol. 34, pp. 15‒36. DOI: http://dx.doi.org/10.1016/j.jimonfin.2012.11.003

Edmonds T. (2013), The Independent Commission on Banking: The Vickers Report, House of Commons, 30 December 2013.

European Systemic Risk Board (2013), Is Europe Overbanked?, „Reports of the Advisory Scientific Committee”, No. 4, June.

Federal Deposit Insurance Corporation (2014), TBTF Subsidy for Large Banks – Literature Review, August.

Financial Services Authority (2009), The Turner Review, March 2009.

Fisher R. W. (2013), Correcting ‘Dodd-Frank’ to Actually End Too Big To Fail, Statement before the Committee on Financial Services U.S. House of Representatives. Hearing on „Examining How the Dodd-Frak Act Could Result in More Taxpayer-Funded Bailout”, Washington D.C., June 2013.

Gambacorta L., van Rixtel A. (2013), Structural bank regulation initiatives: approaches and implications, „BIS Working Papers”, No. 412, April.

Gormley T.A, Johnson S., Rhee C. (2014), Ending ‘Too Big To Fail’: Government Promises vs. Investor Perceptions, „Asian Development Bank Economics Working Paper”, No. 314.

Gros D. (2013). Banking Union with a Sovereign Virus. The self-servicing regulatory treatment of sovereign debt in the euro area, „CEPS Policy Brief”, No. 289. DOI: http://dx.doi.org/10.1007/s10272-013-0449-8

Green R.K., Wachter S.M. (2007), The Housing Finance Revolution, Paper for 31st Economic Policy Symposium: Housing, Housing Finance and Monetary Policy, Jackson Hole, Wyoming.

Haldane A.G., Alessandri P. (2009), Banking on the state, Paper for conference „The International Financial Crisis: Have the Rules of Finance Changed?”, Federal Bank of Chicago, 25th September 2009.

Honohan P. (2009), Resolving Ireland’s Banking Crisis, „The Economic and Social Review”, No. 40, pp. 207‒231.

Hoshi T., Kashyap A.K. (2013), Will the US and Europe Avoid a Lost Decade? Lessons from Japan’s Post Crisis Experience, 14th Jacques Polak Annual Research Conference, 7‒8 November.

International Monetary Fund (2014), How Big is the Implicit Subsidy for Banks Considered Too Important to Fail?, „Global Financial Stability Report”, IMF, April, pp. 101‒132.

Jabko N., Massoc E. (2012), French capitalism under stress: How Nicolas Sarkozy rescued the banks, „Review of International Political Economy”, Vol. 19, pp. 562‒585. DOI: http://dx.doi.org/10.1080/09692290.2011.638896

Jorda O., Schularick M., Taylor A. (2014), Betting the House, „NBER Working Paper”, No. 2077.

Kąkol M., Mucha-Leszko B. (2011), Od kryzysu finansowego do kryzysu finansów publicznych, [w:] B. Mucha-Leszko [red.], Gospodarka i polityka makroekonomiczna strefy euro w latach 2008‒2010, Wyd. UMCS, Lublin.

Krahnen J.P. (2013), Rescue by Regulation? Key Points of the Liikanen Report, „White Paper Series”, No. 9.

Lall R. (2012), From failure to failure: The politics of international banking, „Review of International Political Economy”, Vol. 19, pp. 609‒638. DOI: http://dx.doi.org/10.1080/09692290.2011.603669

Małecki W. (2014), Przemiany sektora bankowego i ich konsekwencje, „Ekonomista”, nr 4, 467‒488.

Morris S., Shin H.S. (2008), Financial Regulation in a Systemic Context, „Brookings Papers on Economic Activity”, Fall, pp. 1‒29.

Mucha-Leszko B. (2012), Przyszłość strefy euro – ściślejsza integracja czy powrót do dwóch prędkości?, „Folia Oeconomica Acta Universitas Lodziensis”, nr 273, pp. 302‒316.

Pronobis M. (2013), Czy Europejski Bank Centralny uratuje strefę euro?, „Analiza Natolińska”, nr 9 (68).

Schich, S., Bijlsma M., Mocking R. (2014), Improving the monitoring of the value of the implicit guarantees for bank credit, „Financial Market Trends”, OECD, No. 1, pp. 7‒37.

Przybylska-Kapuścińska W., Skopowski M. (2013), Unia bankowa – szanse i zagrożenia dla nadzoru nad instytucjami finansowymi, [w:] M. Zaleska (red.), Unia bankowa, Difin, Warszawa.

Schoenmaker D. (2015), Stabilizing and Healing the Irish Banking System: Policy Lessons, referat na konferencję CBI-CEPR-IMF Ireland-Lessons From Its Recovery from the Bank-Sovereign Loop, 19th January Dublin.

Sinn H.-W. (2014), Responsibility of States and Central Banks in the Euro Crisis, „CESifo Forum”, Vol. 15, No. 1.

Sławiński A. (2014), Zmniejszenie się skuteczności polityki pieniężnej w wyniku recesji wywołanej kryzysem bankowym: Przypadek Japonii i strefy euro, [w:] J. Czekaj, S. Owsiak (red.), Finanse w rozwoju gospodarczym i społecznym, PWE, Warszawa, s. 13‒36.

Sławiński A. (2012), Strefa euro: scenariusz alternatywny, „Folia Oeconomica, Acta Universitatis Lodziensis”, nr 273, s. 373‒384.

Tchorek G. (2014), Źródła kryzysu a nowe rozwiązania instytucjonalne w strefie euro, „Finanse”, nr 1 (7).

EU Commission (2012), The High –Level Expert Group on Reforming the Structure of the EU Banking Sector, 2 October Brussels.

Vestergaard J., Retana M. (2013), Behind Smoke and Mirrors, „DIIS Report”, Danish Institute for International Studies, No. 10.

Vinals J., Pazarbasioglu C., Surti J., Narain A., Erbenova M., Chow J. (2013), Creating a Safer Financial System: Will Volcker, Vickers, and Liikanen Structural Measures Help?, „IMF Staff Discussion Note”, May.

Węcławski J. (2013), Wielkie banki i ich rola w kryzysie finansowym, „Annales Universitatis Mariae Curie-Skłodowska”, vol. XLVII, nr 1, s. 219‒228.

Wilmarth A.E. (2009), The Dark Side of Universal Banking: Financial Conglomerates and the Origins of the Subprime Financial Crisis, „Connecticut Law Review”, Vol. 41, No. 4.




DOI: http://dx.doi.org/10.17951/h.2015.49.2.181
Date of publication: 2015-07-28 13:12:34
Date of submission: 2015-07-28 10:29:28


Statistics


Total abstract view - 633
Downloads (from 2020-06-17) - PDF (Język Polski) - 0

Indicators



Refbacks

  • There are currently no refbacks.


Copyright (c) 2015 Andrzej Sławiński

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.