By Beatrice Weder di Mauro, Jeromin Zettelmeyer, Tobias Tröger, Nicolas Véron, Jean Pisani-Ferry, Franz C. Mayer, Philippe Martin, Jan-Pieter Krahnen, Thorsten Beck
Although more progress has been achieved than most observers could have imagined 12 years ago, the European Banking Union still has important gaps and deficiencies. A new CEPR Policy Insight asks why it got stuck and analyse what it would take to get it unstuck. The authors argue that policymakers should at a minimum aim for reform involving (i) a ‘super’ Single Resolution Board that both fully integrates national resolution bodies and national deposit insurance schemes, possibly in a two-tier design; and (ii) concentration limits for sovereign bond holdings by banks, thereby discouraging government bailout of banks and weakening the bank-state nexus