EU Framework for Safeguarding Financial Stability : Towards an Analytical Benchmark for Assessing its Effectiveness

Author/Editor:

María Nieto ; Garry J. Schinasi

Publication Date:

November 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

European finance is becoming increasingly cross-border, while the European architecture for safeguarding financial stability - including decision-making processes for providing financial-stability public goods - have remained decentralized with some explicit mechanisms for coordination across countries. Policy makers are aware of the limitations of the existing institutional setting, but opinions on how to proceed, including on burden sharing, are lining up along national and regional political lines with less attention paid to European needs. This paper applies the 'economics of alliances' to examine these European policy challenges. The paper establishes benchmarks for assessing the ability of Europe's existing institutional architecture to efficiently allocate resources to safeguard the EU financial system against systemic threats to stability, such as the insolvency of a pan European bank.

Series:

Working Paper No. 07/260

Subject:

English

Publication Date:

November 1, 2007

ISBN/ISSN:

9781451868234/1018-5941

Stock No:

WPIEA2007260

Format:

Paper

Pages:

23

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