Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110915
Authors: 
Tröger, Tobias H.
Year of Publication: 
2015
Series/Report no.: 
IMFS Working Paper Series 93
Abstract: 
This paper looks into the specific influence that the European banking union will have on (future) bank client relationships. It shows that the intended regulatory influence on market conditions in principle serves as a powerful governance tool to achieve financial stability objectives. From this vantage, it analyzes macro-prudential instruments with a particular view to mortgage lending markets - the latter have been critical in the emergence of many modern financial crises. In gauging the impact of the new European supervisory framework, it finds that the ECB will lack influence on key macro-prudential tools to push through more rigid supervisory policies vis-à-vis forbearing national authorities. Furthermore, this paper points out that the current design of the European bail-in tool supplies resolution authorities with undue discretion. This feature which also afflicts the SRM imperils the key policy objective to re-instill market discipline on banks' debt financing operations. The latter is also called into question because the nested regulatory technique that aims at preventing bail-outs unintendedly opens additional maneuvering space for political decision makers.
Subjects: 
banking union
macro-prudential supervision
real estate lending
bail-in
market discipline
JEL: 
E44
G01
G18
G21
G28
K22
K23
Document Type: 
Working Paper

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