EU institutions

Michele Lanotte, Pietro Tommasino, 05 February 2018

Late last year, the Basel Committee decided to maintain the status quo regarding regulation of banks’ sovereign debt holdings. This column summarises the reasons to be cautious of stricter regulation of banks’ sovereign exposures. Theory and experience suggest small net benefits from such a reform, with possible increases in tail risks. The best instrument to tackle the problem is not microprudential regulation, but sounder public finances and the completion of the banking union.

Agnès Bénassy-Quéré, Markus K Brunnermeier, Henrik Enderlein, Emmanuel Farhi, Marcel Fratzscher, Clemens Fuest, Pierre-Olivier Gourinchas, Philippe Martin, Jean Pisani-Ferry, Hélène Rey, Isabel Schnabel, Nicolas Véron, Beatrice Weder di Mauro, Jeromin Zettelmeyer, 17 January 2018

The euro area continues to suffer from critical weaknesses that are the result of a poorly designed fiscal and financial architecture, but its members are divided on how to address the problems. This column proposes six reforms which, if delivered as a package, would improve the euro area’s financial stability, political cohesion, and potential for delivering prosperity to its citizens, all while addressing the priorities and concerns of participating countries.

Guido Tabellini, 23 November 2017

In the debate on European reforms, a sovereign debt restructuring mechanism for the Eurozone is often proposed. This column argues that such a mechanism is not required. Instead, Eurozone member states should issue GDP-linked bonds, which would enact an implicit seniority structure on their sovereign debt and make the Eurozone more resilient to the next crisis.

László Bruszt, Nauro Campos, 17 November 2017

The many benefits and costs of economic integration are notoriously difficult to pinpoint. This column introduces new institutional measures for 17 EU candidate countries since 1997 to explore whether deep integration helps the build-up of state capacity. Estimates highlight the relationship between judiciary capacity and bureaucratic independence as the key engine behind state capacity-building engendered by the prospect of EU membership.

Gylfi Zoega, 03 November 2017

The vote for Brexit and the election of Trump are just two examples of the recent rise in populism. This column discusses how support for populist parties in Europe is closely correlated with a lack of trust in national parliaments and in the European Parliament. The EU must convince voters that it is acting in their interests and taking their concerns into account. At the same time, a distinction has to be made between decisions that should be taken at the EU level and those that are better left in the hands of the member states.

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