Muhammad Qasim Rafique [email protected] MS. EXCEL 2007 Introduction to Chart(s)
Key issues and challenges in european banking union ibt pir qasim shah
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Transcript of Key issues and challenges in european banking union ibt pir qasim shah
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European Banking Union: Key Issues & ChallengesBy Pir Qasim Shah
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O U T L I N E• Overview of ECB
• Banking Regulation &
Supervision
• Resolution of Troubled Banks
Pir Qasim Shah ICP EU Banking Challenges & Issues 2
• Deposit Guarantee Funds
• Conflicting Interactions
• Politics of Banking Union
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Overview of ECB – General • Using synergy making a single Effective Financial
Market.
• Banks are central to the EU financial system as ¾ Credit is given by Banks
• Technicality faced by ECB with respect to Credit Provisions, Jobs & its Impact on Economic Growth of individuals and Businesses
Pir Qasim Shah ICP EU Banking Challenges & Issues
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Overview of ECB – Specific• Dealing with Short Term Crisis VS Long Term
Improvements of Single Financial Market• The opportunity cost of Economic Growth & Financial
Safety; A trade-off• The Efficiency of Centralized Supervision VS the Benefits
of Local Knowledge• The Advantages of Single Regulator VS the Benefits of
Multiple Specialized Regulators• Supervisory Independence from Political Interference VS
Accountability
Pir Qasim Shah ICP EU Banking Challenges & Issues
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Banking Regulation & Supervision• Authorizing credit institutions to operate.• Ensuring compliance with minimum capital
requirements.• Ensuring the adequacy of capital relative to
risk.• Supervising the consolidated activities of
the banking group.• Ensuring compliance with leverage and
liquidity rules.• Carrying out early intervention measures,
when a bank becomes troubled.Pir Qasim Shah ICP EU Banking Challenges & Issues
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Resolution of Troubled Banks
• Strong predisposition about banking failures in Europe
• All Liabilities are mostly guaranteed to ovoid risk.
• Avoid and Minimize Severe Financial Crises• Shifting Economic Burden to the Share-
Holder not the Tax-Payer• Fair distribution of losses across the
member statesPir Qasim Shah ICP EU Banking Challenges & Issues
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Deposit Guarantee Funds
Pir Qasim Shah ICP EU Banking Challenges & Issues
• Distinct rules and approaches towards deposit guarantees
• What deposits should be guaranteed and up to what limits? €100,000/-
• Single Deposit Guarantee Schemes instead of Multiple/National resulting in reduced depositor confusion and regulatory arbitrage
• Political and Economic Policies for Risk of Loss incase of Exit of a Member Country
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Conflicting Interactions of Supervision, Resolution & Deposit Guarantees
Pir Qasim Shah ICP EU Banking Challenges & Issues
• Rights of deposit guarantor to protect his own interests call for national regulatory body.
• Difference in Risk Factors for State/EU Deposit Guarantees.
• Similarly Local and Central Resolution Mechanisms affect the Depositors.
• Supervision of Degree of Guarantees and Distribution of Losses.
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Politics of Banking Union
Pir Qasim Shah ICP EU Banking Challenges & Issues
• Troubled Nations are in Strong Favor of Banking Union to stabilize their Economic Conditions
• Differing views of Nations in EU but out Geographic EU zone
• UK views it helpful in coping with EU Financial Crises as long as UK stays out of it
• Basic reason for differentiation is the National Financial Structure of Members
• Individual & Collective Concerns to avoid Monetary Disaster
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Politics of Banking Union Cont. . .
Pir Qasim Shah ICP EU Banking Challenges & Issues
• Pressure on Local Bodies, Governments inclined to retain additional control on National Levels, Flow of Funds to the Troubled Nations
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Thank You.
Pir Qasim Shah ICP EU Banking Challenges & Issues
Q & A Session