Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/227543
Authors: 
Famfollet, Jan
Sankotová, Eliška
Year of Publication: 
2020
Citation: 
[Journal:] Review of Economic Perspectives [ISSN:] 1804-1663 [Volume:] 20 [Issue:] 2 [Publisher:] De Gruyter [Place:] Warsaw [Year:] 2020 [Pages:] 109-135
Publisher: 
De Gruyter, Warsaw
Abstract: 
The economic and financial crisis of the year 2008 highlighted the need for banking sector regulation via the creation of the banking union. The Bank Recovery and Resolution Directive (BRRD) represents an important milestone in the formation of the banking union. It is supposed inter alia to replace the existing practice of bailing out failing banks by the opposite principle of bail-in, which makes the bank recapitalized from the internal resources at the detriment of investors and creditors. However, the Italian solution of handling its failing banks took advantage of existing loopholes in the new regulatory system. Eventually, it went against the spirit of the new rules by deploying taxpayers' money to deal with the banks' failure. This article evaluates the Italian approach and contemplates the adequacy of the new rules-based system by comparing its potentially beneficial room for flexibility with alleged malfunction and unreliability. Finally, it discusses the potential impact of the Italian approach on the further process of completing the banking union, in particular the establishment of its last pillar, the common deposit guarantee scheme.
Subjects: 
banking union
banking supervision
BRRD
bail-in
bailout
precautionary recapitalisation
non-performing loans
Italian banking sector
JEL: 
G18
G33
G38
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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