Surmounting an existential challenge: The European banking authority’s search for a sustainable supervisory role after the banking union

Abstract

With the advent of the Banking Union and its confluence with the single banking market, the European Banking Authority (EBA) has been pushed into an ‘existential search’ for a sustainable role in supervisory policy. This is a challenging task whose success is dependent on the EBA’s ability to deal with policy diversity across member states. This paper examines the relationship between the EBA and member states by focusing on the authority’s internal governance and its ‘national anchoring’. Challenging the political economy critique that overstates the disadvantages of national anchoring, the paper draws on experimentalist governance scholarship, as well as several original data sources, to argue that such anchoring is critical for the EBA to overcome its existential challenge. To support this claim, the paper examines the EBA’s core supervisory activities: first, the development of guidelines for the Supervisory Review and Evaluation Process (SREP), and second, its enforcement powers in cases of explicit breach of EU law. Its findings suggest first that the future of the EBA’s role lies in supervisory convergence rather than enforcement; and second, that national anchoring allows the authority to make the most of experimentalist practices and should thus be viewed as an internal governance advantage.