Giacomo Calzolari, Jean-Edouard Colliard, Gyöngyi Lóránth, 30 July 2016

The presence of multiple national authorities in the EU poses substantial coordination problems for the supervision of multinational banks. The Single Supervisory Mechanism aims to solve the resulting coordination failures. This column explores how banks could strategically react to the introduction of a supranational supervisor. The banking system is likely to endogenously react by reverting to an organisational form for which supranational supervision is actually less essential.

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