Following the introduction of the Banking Communication in 2013 and the Single Resolution Mechanism in 2015, European banks received almost €60 billion in public support, primarily through insolvency proceedings (e.g., the Veneto banks) and precautionary aid tools (e.g., Monte dei Paschi di Siena), in addition to the burden-sharing required by State aid rules. The inefficiency of a framework designed to avoid the use of public resources in the management of banking crises has numerous causes. One aspect is the interaction between the State aid framework, the rules on preventive interventions of Deposit Guarantee Schemes, and the burden-sharing measures in their various forms. After verifying the compatibility of these systems with primary EU law, this paper demonstrates that their interaction is ineffective. Therefore, some reforms to the current structure are suggested to ensure that it operates legally and efficiently. These suggestions will then be critically compared with the reforms contained in the CMDI package.

Read the entire article here: https://ssrn.com/abstract=6802218.