EBI is happy to announce a contribution of Prof. Tobias H. Troeger (Goethe University Frankfurt) and Anastasia Kotovskaia (Leibniz Institute for Financial Research SAFE) in the EBI Working Paper Series No. 114. Their paper entitled “National Interests and Supranational Resolution in the European Banking Union” was published on 11th February 2022.
In the paper, the authors investigate whether the bank crisis management framework of the European banking union can effectively bar the detrimental influence of national interests in cross-border bank failures. They find that both the internal governance structure and decision-making procedure of the Single Resolution Board (SRB) and the interplay between the SRB and national resolution authorities in the implementation of supranationally devised resolution schemes provide inroads that allow opposing national interests to obstruct supranational resolution. The authors also show that the Single Resolution Fund (SRF), even after the ratification of the reform of the European Stability Mechanism (ESM) and the introduction of the SRF backstop facility, is inapt to overcome these frictions. They propose a full supranationalization of resolution decision making. This would allow European authorities in charge of bank crisis management to operate autonomously and achieve socially optimal outcomes beyond national borders.