Abstract
Failures of internationally active banks some years ago pointed to deficiencies in private and public governance for such banks as Banco Ambrosiano, BCCI and Barings. As the European Union makes progress towards integrating the financial system within the enlarged EU, the financial safety net has again become a topic of prominent discussion. This paper presents the national institutional arrangements to preserve financial stability and focuses on the coordination among prudential regulators/supervisors, deposit insurance and resolution authorities between EU countries. Regulators' incentives to share information on banks' financial condition and coordinated action in a context of asymmetric information deserve especial attention. The paper concludes that the EU's safety net is a work in progress — much has already been accomplished, but its development is still ongoing.
Published Version
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